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Stocks Slide as Investors Predict Rebound in Equities Will Falter

Strategic Insights

— 1 min read

U.S. stocks continue to slump, led by a 2.4% decline in the S&P 500 Index, as investors from George Soros to Marc Faber predict the rebound in equities will falter, citing a seventh straight quarter of declining earnings. The dollar rose against most currencies, oil fell, and Treasuries gained. General Motors plunged 12% and Caterpillar dropped 5.9%. Applied Materials retreated 8.7% after a contract for solar equipment was slashed by $1.65 billion.

Key Takeaways:

  • The S&P 500 Index decreased 2.4% to 815.55, with the Dow Jones Industrial Average tumbling 186.29 points, or 2.3%, to 7,789.56.
  • Earnings for S&P 500 companies probably fell 37% on average in the first quarter, according to estimates from more than 1,700 securities analysts compiled by Bloomberg.
  • The stretch of seven straight declines in earnings is the longest since at least the Great Depression, data compiled by S&P and Bloomberg show.
  • General Motors is speeding up preparations for a possible bankruptcy filing, even as directors scout for deeper savings this week to avoid that outcome.
  • Faber predicts the S&P 500 Index may decline to about 750 and rebound after July.
  • Applied Materials, ADM, AT&T Inc., and Verizon Communications Inc. lost 2.5% and 2.6% respectively, leading telecommunication companies in the S&P 500 to the biggest decline among 10 industry groups.

Statistics:

  • 2.4% decline in the S&P 500 Index
  • 2.3% decline in the Dow Jones Industrial Average
  • 12% drop in General Motors stock
  • 5.9% drop in Caterpillar's stock
  • 8.7% retreat in Applied Materials stock after a contract for solar equipment was slashed by $1.65 billion
  • 37% predicted decline in earnings for S&P 500 companies in the first quarter
  • Seven straight declines in earnings since the Great Depression

Sources:

  • "George Soros: It's a Bear-Market Rally" (Bloomberg Television)
  • Bloomberg: "S&P 500 Companies' Earnings to Drop 37% in First Quarter"
  • European markets (Reuters)
  • Asia's regional benchmark (Bloomberg)
  • Alcoa Inc. earnings report (Bloomberg)
  • "Marc Faber: S&P 500 Index May Decline to About 750 and Rebound After July" (Bloomberg)
  • Charles Dautresme, a strategist at Axa Investment Managers (Bloomberg)
  • Qwest Communications International Inc. earnings report (Bloomberg)

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