U.S. Stocks Drop as China Growth Slows, Commodities Slump

Story by Bloomberg
Written by Inyoung Hwang

U.S. stocks declined, sending the Standard & Poor’s 500 Index lower for a second day, after China’s economy grew at a slower pace than economists forecasts.

Material and energy companies fell the most as all 10 S&P 500 (SPX) groups retreated. Freeport-McMoRan Copper & Gold Inc. (FCX), the world’s largest publicly traded copper producer, and Newmont Mining Corp. tumbled more than 6.3 percent as commodities slumped to a nine-month low. Citigroup Inc. (C) jumped 2.6 percent as first-quarter profit rose 30 percent. Sprint Nextel Corp. surged 16 percent after Dish (DISH) Network Corp. offered to buy the company in a $25.5 billion deal.

The S&P 500 dropped 0.8 percent to 1,576.06 at 10:09 a.m. in New York. The gauge slipped 0.3 percent on April 12 from an all-time high, trimming its biggest weekly advance since January. The Dow Jones Industrial Average erased 99.49 points, or 0.7 percent, to 14,765.57. Trading in S&P 500 stocks was 61 percent above the 30-day average at this time of day.

“The international situation continues to concern people, both in regard to Europe and China,” John Carey, a fund manager at Boston-based Pioneer Investment Management Inc., said by telephone. His firm oversees about $208 billion. “People are watching for some signs of improvement in both areas. Otherwise, we’re just in the early stages of earnings season, so people will have one eye on what’s going on outside the U.S. and another maybe closer eye on what’s happening with regard to earnings.”

The S&P GSCI gauge of 24 commodities sank to the lowest level since July as gold tumbled as much as 7.8 percent and silver plunged as much as 13 percent.

China GDP

China’s gross domestic product rose 7.7 in the first quarter from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 8 percent median forecast in a Bloomberg survey of economists and 7.9 percent growth in the fourth quarter. Separate reports showed March industrial production rose less than estimated while retail- sales growth matched forecasts.

European Central Bank President Mario Draghi said monetary policy can’t address the root causes of the sovereign debt crisis and it’s up to governments to enact structural reforms.

“Problems in the euro-area economic landscape still loom large” and “the way out is to restore competitiveness,” Draghi said in a speech in Amsterdam today. “Undertaking structural reforms, budget consolidation and restoring bank balance-sheet health is neither the responsibility nor the mandate of monetary policy.”
Manufacturing Report

In the U.S., data today showed manufacturing in the New York region expanded less than projected in April as orders cooled and sales stagnated. The Federal Reserve Bank of New York’s general economic index dropped to 3.1 this month from 9.2 in March. The median projection of 47 economists surveyed by Bloomberg was 7.

U.S. stocks rallied last week, sending the S&P 500 up 2.3 percent, amid optimism that global stimulus efforts and corporate earnings growth will continue to power the world’s largest economy.

Profits at S&P 500 companies are forecast to drop 1.4 percent in the first three months of the year, according to analyst estimates compiled by Bloomberg. That would mark the first year-over-year decrease since 2009.

Freeport dropped 6.3 percent to $29.92 as Citigroup downgraded the shares to sell from neutral and cut its price estimate by 29 percent to $25. Copper reached a 17-month low in New York. Newmont Mining, the largest U.S. gold producer, retreated 6.8 percent to $33.89 as precious metals also tumbled.

Link: http://www.bloomberg.com/news/2013-04-15/u-s-stock-index-futures-drop-as-chinese-growth-slows.html