Markets slip as investors retreat to safe havens

NEW YORK | Investors dumped stocks and sought safe-haven assets like the dollar and Treasurys on signs that the global economy is still struggling.

The Dow Jones Industrial Average lost 104 points Tuesday but recovered some of its earlier losses.

A disappointing earnings forecast from Dow Jones industrials component 3M Co. and a weak sales report from McDonald’s Corp., another Dow company, pulled stocks lower. The reports overshadowed an increased profit forecast from FedEx Corp.

Reports in Britain and Germany signaled that manufacturing remains weak, while Japan’s government approved $81 billion in stimulus measures to keep its economy out of recession. Credit rating agencies warned about debt problems in Greece and Dubai, United Arab Emirates.

Investors sent the dollar and Treasury prices higher in response to the day’s news. Commodities fell as the dollar rose. A stronger dollar makes commodities more expensive for buyers overseas, and hurts profits at companies that have large international operations.

Stocks came off their lows of the day as President Obama proposed spending on infrastructure projects as well as increased tax cuts for small businesses.

The speech came after the government’s unemployment report Friday showed far fewer job losses in November than expected. However, investors still have doubts about how strong a recovery will be with one in 10 Americans out of work.

The Dow closed down 104.14 to 10,285.97. The Dow had earlier fallen as much as 140 points.

The broader Standard & Poor’s 500 Index fell 11.31 to 1,091.94, while the Nasdaq Composite Index fell 16.62 to 2,172.99.

Shares of 3M fell after the consumer products maker predicted adjusted earnings of $4.50 to $4.55 per share for the full year. That’s below a profit of $4.57 per share forecast by analysts. The stock fell 80 cents, or 1 percent, to $77.11.

McDonald’s fell $1.32, or 2.1 percent, to $60.61 after the world’s largest fast-food chain said monthly sales in the U.S. fell in November.

FedEx raised its earnings forecast for the November quarter late Monday. Shares of the package delivery company rose $2.36, or 2.7 percent, to $89.88. Investors watch FedEx because the volume of its business is seen as an indicator of the overall strength of the economy.

The Kroger Co. tumbled $2.72, or 11.9 percent, to $20.13 after the nation’s largest grocery chain posted an unexpected loss and lowered its sales and profit forecasts for the year as price competition cuts into its business.

Bond prices rose, sending yields lower. The yield on the benchmark 10-year Treasury note fell to 3.39 percent from 3.43 percent late Monday.

The Russell 2000 index of smaller companies fell 5.86, or 1 percent, to 597.70.