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Stocks slide, and investors wait for earnings
NEW YORK—US stocks slumped yesterday on Wall Street after the International Monetary Fund (IMF) predicted weaker world economic growth and as investors waited for what they expected to be lower corporate earnings. The Dow Jones industrial average declined 110.12 points, or 0.8 per cent, to 13,473.53. The Standard & Poor’s 500 index dropped 14.40 points, a hair under one1 per cent, to 1,441.48.
The Nasdaq composite index lost 47.33 points, or 1.5 per cent, to 3,065.02. The slide came on the five-year anniversary of record high closes for the Dow and S&P 500. The Dow is about 700 points off its all-time high, 14,164.53. It would take a five per cent rally from here to reach the record. Investors were discouraged by an IMF report released overnight that said the global economy was weakening and the downturn in developing nations had begun to spread.
The weak forecast came one day after the World Bank cut its estimate for growth in China, the world’s second-largest economy, and for developing countries across Asia.
The IMF forecasts that the world economy will expand 3.3 per cent this year, down from the estimate of 3.5 per cent growth it issued in July. Its forecast for growth in 2013 is 3.6 per cent, down from 4.1 per cent in April. Overall, analysts expect earnings at S&P 500 companies to be down compared with last year, the first decline in almost three years.
The yield on the 10-year Treasury note fell to 1.72 per cent from 1.74 per cent late Friday. European markets also fell. Benchmark indexes fell 0.8 per cent in Germany and 0.5 per cent Britain. France’s stock market index fell 0.7 per cent.
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