- Obama admin to blame for HealthCare.gov woes, $840M cost: GAO
- Al Gore’s climate-changers at EPA hearings foiled by cool temperatures
- Army’s 3-D printed bombs will create ‘a whole new universe’ of deadly capabilities
- Hamas calls on Hezbollah to join in fight against Israel
- Senators to FIFA, others: Don’t reward Putin with the World Cup in 2018
- U.S. condemns Israeli shelling of shelter in Gaza
- Obamacare shoots premiums up by 88 percent in California
- Chicken pox outbreak puts illegal immigrant facility on lockdown
- Obama to Republicans: ‘Stop just hatin’ all the time’
- U.S. chemical sites vulnerable despite millions spent on security: Congress
U.S. stocks drift as European gloom returns
Question of the Day
U.S. stocks meandered sideways Monday as fears about Europe overshadowed recent excitement about central banks’ efforts to boost the market.
Stocks opened lower, recovered by mid-afternoon to nearly flat and closed down modestly.
An index of business confidence in Germany, the biggest economy in Europe, fell for a fifth straight month. Many economists had expected it to at least remain flat. Some think Germany is headed for a recession.
The threat of the years-old European debt crisis has seemed less immediate in recent weeks as central banks unveiled measures aimed at encouraging investment and boosting the global economy. The German report reignited those fears.
Stocks had risen strongly in recent weeks as traders anticipated, then received, help from the Federal Reserve in the form of an open-ended bond-buying program. The Fed will buy $40 billion of mortgage bonds per month until the economy has improved.
“It’s not unusual after big moves for the market to, in essence, go quiet and wait for the next catalyst,” said Quincy Krosby, market strategist with Prudential Financial. The next catalyst, Krosby said, is third-quarter earnings, which companies will begin to announce next month.
The Dow Jones industrial average closed down 20.55 points, or 0.2 percent, at 13,558.92. The Standard & Poor’s 500 index declined 3.26, or 0.2 percent, to 1,459.89. Its two strongest groups were utilities and telecommunications, safer stocks that tend to do well in a weaker economy.
The Nasdaq composite index dropped 19.18 points, or 0.6 percent, to 3,160.78. The Nasdaq is heavy in technology shares, which were dragged lower by Apple.
As in the U.S., the concern in Germany is that an economy on the rebound will be weighed down by the rest of the European countries, half of which are already in recession.
Germany’s economy grew 0.3 percent in the second quarter from the previous quarter, but a number of economists now believe the country will fall into a recession in the second half of the year.
In the U.S., stocks have gone from underpriced to fairly priced, said Doug Cote, chief market strategist at ING Investment Management. If recent weakness in U.S. manufacturing is any guide, he said, traders will be disappointed next month by companies’ quarterly results.
“It will be a sea change — the first time in three years that we’ve had negative earnings growth,” Cote said. He said China’s abrupt economic slowdown is adding to corporate America’s woes.
“There’s an uneasy feeling surrounding the market,” she said.
In the U.S., traders are looking for more good news from the housing market, which appears to be bouncing back after being a stuck in a rut for years. The latest data on new and pending home sales will be released later in the week.
TWT Video Picks
- Geraldo Rivera: Matt Drudge 'doing his best to stir up a civil war'
- Catholic League slams Obama: 'Do Christian lives mean so little to you?'
- Lois Lerner hated conservatives, new emails show
- HURT: Impeaching Obama is a losing strategy for the GOP
- MSNBC's Ronan Farrow questions lack of racial diversity in emoji characters
- Obama thanks Muslims for 'building the very fabric of our nation'
- Fla. mom arrested for allowing 7-year-old son to walk to park alone
- CARSON: Rudderless U.S. foreign policy
- Federal judge grants 90-day stay in D.C. gun case
- Patent workers paid to exercise, shop, do chores: report
Obama's biggest White House 'fails'
Celebrities turned politicians
Athletes turned actors
20 gadgets that changed the world