While you were sleeping: Stocks slide on outlook

While you were sleeping: Stocks slide on outlook

May 4 (BusinessDesk) - Stocks on both sides of the Atlantic dropped amid concern about global economic growth and disappointing corporate earnings.

A report about China’s manufacturing sector underpinned concern the country’s economy is failing to respond to government efforts to boost the pace of growth.

Europe’s Stoxx 600 Index ended the session with a 1.7 percent drop from the previous close. Shares of UBS and Commerzbank sank on disappointing earnings.

The UK’s FTSE 100 index slid 0.9 percent, France’s CAC 40 index fell 1.6 percent, while Germany’s DAX index shed 1.9 percent.

“What markets need most right now is to see better numbers from the economic indicators in Europe and a better view from companies on their future earnings,” Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn, Germany, told Bloomberg.

Wall Street also declined. In 2.45pm New York trading, the Dow Jones Industrial Average dropped 0.7 percent, while the Nasdaq Composite Index declined 0.9 percent. In 2.30pm trading, the Standard & Poor’s 500 Index gave up 0.8 percent.

"We are reacting to the negative news overnight from China and Europe, and investors are waiting for the jobs data," Kim Forrest, senior equity research analyst, Fort Pitt Capital Group in Pittsburgh, told Reuters.

Investors will scrutinise the US nonfarm payrolls data on Friday to help gauge the strength of the US economy and the timing of any Federal Reserve rate increases.

"Investors are waiting for better economic data as a justification for the current prices and till we get the jobs data, we might see some down days,” Forrest noted.

Declines in shares of JPMorgan Chase and those of Cisco, down 2.3 percent and 2 percent respectively, led the Dow lower. Bucking the trend were shares of Pfizer and those of Apple, up 3.1 percent and 1.9 percent respectively.

Shares of Ford Motor traded 1.4 percent lower as of 3.02 pm, while those of General Motors traded 1.8 percent weaker, after their latest sales data failed to meet expectations.

While April car sales data offered improvement from a lacklustre March, there was caution about the outlook.

“The market is not quite as robust as it was last year, and that’s what you’re starting to see,’’ Judy Wheeler, vice president of sales for Nissan’s US business, told Bloomberg. “But it will still be fairly strong.’’

Shares of Pfizer rose after the company posted better-than-expected quarterly earnings and boosted its 2016 sales and profit outlook.

The upgrade reflects “the strong operational performance to date coupled with an improved business outlook for 2016," Pfizer CEO Ian Read said in a statement. "Changes in foreign exchange rates since mid-January 2016 also favourably impacted our updated guidance.”

(BusinessDesk)

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