Bloomberg News

Dow Caps Longest Losing Streak Since August on Economic Reports

January 31, 2012

Jan. 31 (Bloomberg) -- U.S. stocks fell for a fourth day, the longest streak for the Dow Jones Industrial Average since August, as reports showed consumer confidence trailed economists’ projections and business activity cooled.

Stocks pared earlier losses as financial shares rallied. Morgan Stanley and Goldman Sachs Group Inc. added at least 1.5 percent. Exxon Mobil Corp., the largest energy company by market value, dropped 2.1 percent on lower-than-forecast sales. Archer Daniels Midland Co. tumbled 3.6 percent as the world’s biggest grain processor reported an 89 percent plunge in earnings. Amazon.com Inc. tumbled 9.2 percent at 5:18 p.m. New York time as sales at the largest Internet retailer missed estimates.

The Standard & Poor’s 500 Index declined 0.1 percent to 1,312.41 at 4 p.m. New York time. The benchmark gauge fell as much as 0.5 percent and rose 0.6 percent earlier today. The Dow retreated 20.81 points, or 0.2 percent, to 12,632.91.

“People are on the fence with respect to whether we accelerate in economic terms or slow down again,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. “We’d like to see better economic growth for sure.”

Stocks erased early gains as reports showed that consumer confidence unexpectedly dropped in January and a gauge of business activity fell, underscoring forecasts that the U.S. economy will cool after expanding at the fastest pace since the second quarter 2010. Earlier gains were triggered after most countries in Europe agreed to tighter budget controls and Greece made progress on debt talks.

Earnings Season

A four-day drop trimmed the S&P 500’s monthly rally to 4.4 percent. The index still capped the best January gain in 15 years amid the Federal Reserve’s plans to keep interest rates low through at least late 2014 and better-than-estimated earnings. Of the 196 S&P 500 companies that reported results since Jan. 9, 131 posted per-share earnings that beat projections, Bloomberg data show.

“We’re moving closer to relief from the European problem becoming one of catastrophe,” Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion, said in a telephone interview. “The market is recognizing that European officials are working towards solutions. As more of that fades, what takes prominence is the fact that the corporate picture remains pretty decent.”

Exxon Mobil dropped 2.1 percent, the biggest decline in the Dow, to $83.74. Revenue rose 16 percent to $121.6 billion during the quarter, less than the $124.4 billion average of five analysts’ estimates compiled by Bloomberg.

ADM Falls

ADM sank 3.6 percent to $28.63. The company, led by Chairman and Chief Executive Officer Patricia Woertz, has missed analysts’ estimates for three straight quarters. Operating profit at the agricultural-services unit, the company’s largest segment by revenue in fiscal 2011, fell 63 percent to $158 million after U.S. grain exports declined because of a smaller domestic crop and “adequate” global supplies, ADM said.

United Parcel Service Inc. lost 0.7 percent to $75.65, paring a drop of as much as 1.7 percent. The world’s largest package-delivery company forecast a 2012 profit that exceeded analysts’ estimates as shipping demand increases. Fourth-quarter revenue rose 5.6 percent to $14.17 billion, which missed the $14.45 billion average estimate of 17 analysts surveyed by Bloomberg.

RadioShack Corp. plunged 30 percent to $7.18 after the consumer-electronics retailer suspended share repurchases and reported preliminary fourth-quarter earnings that trailed analysts’ estimates.

Amazon’s Results

Amazon.com tumbled 9.2 percent to $176.61 after the close of regular trading. The company also reported a 57 percent decline in profit, dragged down by shipping costs and the money- losing Kindle Fire.

The S&P 500 Diversified Financials Index rose 0.8 percent, the most among 24 groups. Morgan Stanley advanced 2.5 percent to $18.65. Goldman Sachs climbed 1.6 percent to $111.47.

U.S. Steel Corp. gained 5.1 percent to $30.19. The country’s largest producer of the metal by volume forecast improved prices and shipments at its biggest division.

Mattel Inc. rallied 5 percent to $31. The world’s largest toymaker increased its dividend and reported fourth-quarter profit that topped analysts’ estimates.

“Seems like markets are at a crossroad,” Larry Peruzzi, senior equity trader at Cabrera Capital Markets Inc. in Boston, wrote in an e-mail. “Investors are concerned about growth slowing down and European issues lingering but at the same time do not want to miss a rally that many feel is slowly developing.”

--Editors: Jeff Sutherland, Michael P. Regan

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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