Wall Street rally fades

A stock market rally lost steam yesterday after mixed earnings from US companies added to fears about Europe’s economic slowdown. Several big consumer goods companies warned that weak demand in Europe was cutting into their revenue. That followed worrisome economic news from England, France and Germany, where growth had offset recessions in other European countries like Italy and Greece.

Major US stock indexes closed little changed. The Dow Jones industrial average finished up 7.04 points, or 0.1 per cent, at 13,175.64. The Standard & Poor’s 500 index added 0.87 point, or 0.1 per cent, to 1,402.22. The Nasdaq closed down 4.61 points, or 0.2 per cent, at 3,011.25. The Dow had risen 290 points over the previous three trading days. On Tuesday, the S&P 500 passed 1,400 and the Nasdaq composite closed above 3,000, both for the first time since early May.

As stocks in New York traded tentatively, the dollar rose against the euro, a sign that investors are becoming more fearful. The market is being held back in part by reports from consumer-goods companies that weak sales in Europe are hurting revenue, Krosby said. Consumer discretionary stocks fell the most among the 10 industry groups in the S&P 500.

McDonalds fell US$1.48 to US$87.53 after the company said a key revenue figure came in flat in July as the weakening global economy took a toll on customers of the world’s biggest burger chain. McDonalds was the weakest stock in the Dow.

Priceline.com fell more than US$100 after warning investors late Tuesday that its third-quarter revenue and income would come in far below analysts’ forecasts because of the deepening malaise in Europe. Priceline’s stock sank US$117.48, or 17.3 percent, to US$562.32. Priceline’s travails dragged on other online travel sites. TripAdvisor fell US$1.89 to US$36.77 and Expedia lost US$2.73 to US$56.14 percent. That made them three of the five biggest losers in the S&P 500 index.

Ralph Lauren fell US$1.68 to US$151.35 after the company forecast a revenue decline in the current quarter and cautioned that the weak global economy might reduce spending on its clothes and housewares. Earlier Wednesday, the Bank of England said it expects the country’s economy to stagnate this year. Only three months earlier, in its previous quarterly inflation report, the BOE had forecast annual growth of 0.8 per cent.

Separately, the French central bank said it expects France’s economy to contract in the third quarter, the second pullback in a row.

AP