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Stocks sink on mixed economic signals

- Associated Press - Tuesday, October 2, 2012

NEW YORK (AP) — A batch of mixed economic signals tugged major stock indexes lower on Tuesday.

The country's largest fertilizer company, Mosaic, said weak demand from China and India weighed on its profits. But a measure of American home prices posted the largest gain in more than six years, the latest data to indicate an improving housing market.

Mosaic, Dupont and stocks of other companies in the materials industry fell.

Shortly before noon, the Dow Jones industrial average was down 75 points at 13,439. Dupont led the Dow lower, sinking 1.8 percent, or 84 cents, to $49.52.

The Standard & Poor's 500 index dropped three points to 1,441, while the Nasdaq composite fell two points to 3,112.

Health care and utility stocks, to which investors often retreat in a slow-growing economy, were the only two industry groups to rise out of the 10 that make up the S&P 500 index.

Material and energy companies, the fortunes of which are closely tied to the economy, sank the most. Weak earnings from Mosaic were one culprit.

Mosaic reported net income and sales early Tuesday that fell short of analysts' estimates. The company blamed slumping demand for its fertilizer from China and India as well as unfavorable weather for slower production. The results pushed the company's stock down $2.52 to $55.49.

The market could look quiet until the government gives its monthly jobs report on Friday, said Paul Zemsky, chief investment officer of multiasset strategies at ING Investment Management. Economists expect that the unemployment rate increased to 8.2 percent in September from 8.1 percent in August.

Mr. Zemsky said a surprise swing up or down "could change the direction of the stock market and the presidential election."

Core Logic, a private provider of real estate data, said U.S. home prices in August rose 4.6 percent compared with the similar month last year. Prices also rose 0.3 percent from July, the sixth consecutive month of gains.

Other gauges of the housing market have improved in recent months, including home sales.

On Monday, the manufacturing survey from the Institute for Supply Management also showed improvement. ISM's main index nosed above 50, a reading that signals growth. The index was below 50 from June through August.

Investors are looking ahead to quarterly earnings, which begin in earnest when Alcoa, the aluminum company, reports results Oct. 9.

Elsewhere Tuesday, the price of benchmark crude oil fell 12 cents to $92.36 per barrel. The yield on the benchmark 10-year U.S. Treasury note sank to 1.62 percent from 1.63 percent Monday.

Reports that Deutsche Telekom may buy the cellphone carrier MetroPCS Communications sent MetroPCS's stock up 18 percent. Bloomberg News reported that the board of Deutsche Telekom, which owns T-Mobile USA, would vote to approve the deal Wednesday. MetroPCS gained $2.35 to $13.87.

European markets were modestly lower. Benchmark stock indexes fell 0.3 percent in Germany, 0.2 percent in Britain and 0.6 percent in France. Borrowing costs fell slightly for Spain and Italy.

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