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Telecommunications industry

Stocks Fall as Investors Reassess Earnings Outlook

Strategic Insights

— 1 min read

Major US stock indices declined on Thursday due to investor concerns about the earnings outlook for the economy. The Dow Jones industrial average fell 12.46 points, or 0.2 percent, while the Standard & Poor's 500 slid 3.36 points, or 0.3 percent. The Nasdaq composite index dropped 3.54 points, or 0.2 percent. The downturn came despite gains earlier in the day, following rallies in Asia. Investors are now worried that the damage to US earnings may not be over, despite recent rebounds in Asian markets.

Key Takeaways:

  • The Dow Jones industrial average fell 12.46 points, or 0.2 percent, on Thursday, with General Motors leading the decline.
  • The Standard & Poor's 500 fell 3.36 points, or 0.3 percent, with the S&P 500's profit growth expected to slow to 6.6 percent this year from 12.4 percent last year, according to Zacks Investment Research.
  • BellSouth Corp. lost 2 9/16 to 57 5/16 after its application to offer long-distance to customers in its region was rejected by US regulators Wednesday.
  • Drug stocks, led by Merck & Co., down 1 3/4 to 113 1/4, slid on Thursday, following a surge in Monday trading after merger discussions between SmithKline Beecham Plc and Glaxo Wellcome Plc.
  • Investors are shifting money into technology, gaming, restaurant and forest products stocks, according to R. Lynn Yturri, manager of the One Group Income Equity Fund in Phoenix, Ariz.
  • Yturri sold some of his holdings this week in Pfizer Inc., American Home Products Corp., and Schering-Plough Corp.

Statistics:

  • Dow industrials came within 100 points of breaking its August 6 record Tuesday.
  • S&P 500 set records for the first three days of the week, bringing its year-to-date gain to 3.4 percent.
  • S&P 500's profit growth is expected to slow to 6.6 percent this year from 12.4 percent last year, according to Zacks Investment Research.
  • Technology, gaming, restaurant, and forest products stocks are attracting investor attention, according to R. Lynn Yturri.

Sources:

  • Associated Press, "Stocks Fall as Investors Reassess Earnings Outlook"
  • Zacks Investment Research, cited in the AP article.

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