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October 9, 2012

Stocks lower on weak outlook for economy

The Associated Press Associated Press

NORMAN — Investors looked warily at forecasts for poor U.S. corporate earnings and weaker growth in Asia and decided there wasn’t much reason to buy stocks.

The Dow Jones industrial average gave up 26.50 points to close at 13,583.65 points Monday. The Standard & Poor’s 500 index fell 5.05 points to 1,455.88 and the Nasdaq composite lost 23.84 points to 3,112.35.

Companies in the S&P 500 index are expected to post an overall decline in profits for the first time in 11 quarters, according to FactSet. The third-quarter earnings season starts today when aluminum maker Alcoa releases its results.

Today also marks the five-year anniversary of the record high closes of the Dow and the S&P 500. The S&P, a benchmark tracked by many mutual funds, is currently about 7 percent below its record high. The Dow is about 4 percent below its peak.

Stocks have been on a strong run, with the Dow up 11 percent this year, the S&P 500 nearly 16 percent. But Asia’s slowdown, Europe’s problems, and now forecasts of weak U.S. corporate earnings have caused some investors to wonder whether the stock market has risen too far, too fast.

On top of those concerns, some market leaders like Apple have been falling in recent days, noted Bob Pavlik, chief market strategist at Banyan Partners LLC.

Apple closed above $700 on Sept. 18, but has been declining since then. On Monday it fell $14.42 to $638.17.

Also on Monday, the World Bank warned that a “more pronounced slowdown” is possible in China, the world’s second-largest economy. It also cut its overall growth forecast for developing countries in Asia.

Slower growth in Asia could drag down the U.S. economy. One of the few bright points for the U.S. during the recession was tremendous growth in export demand by developing nations in Asia and other regions.

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