Stocks Fell Ahead of Earnings Amid Growth Woes

Published on Monday, 09 July 2012 18:14 Written by Danny Miller

New York, July 9^th (TradersHuddle.com) – Stocks fell ahead of a new earnings season amid global growth worries after a dismal jobs report in the U.S. last week, coupled with signs that the Chinese economy was slowing down more than expected. The growth woes pressured equities, particularly on economic sensitive sectors.

The Dow Jones Industrial Average lost 36.18 points, or 0.28%. The S&P 500 index fell 2.22 points, or 0.16%, while the NASDAQ dropped 5.56 points, or 0.19%.

The market started the new week under pressure amid renewed global growth worries, as global participants digested the dismal jobs report in the U.S. and after inflation data in China eased more than expected, signaling the world’s second largest economy was cooling down more than expected. European debt jitters continued with Spain yields trading above 7% and France selling short-term bonds at negative interest rates for the first time, a sign of investor confidence despite concerns about French debts and the wider euro zone.

Euro zone finance ministers were scheduled to meet later in Brussels to discuss the details of the deals from the EU summit last month, looking to reinforce the single currency and address the banking crisis in the periphery.

M&A was also active, with WellPoint (NYSE: WLP) acquiring Amerigroup (NYSE: AGP) for $92 per share, or about $4.5 billion, and Thompson Reuters (NYSE: TRI) buying FX Alliance for $22 per share.

Also, Campbell Soup (NYSE: CPB) announced that it would be buying Bolthouse Farms for $1.55 billion in cash, in an attempt for the packaged food and beverage giant to make their products healthier. The stock slumped more than 1% as the company reaffirmed fiscal 2012 at low end of guidance ex-acquisition costs.

Most of the S&P 500 sectors closed lower, led by materials, consumer discretionary, and energy, while healthcare gained, boosted by performance from WellPoint, which jumped more than 3%, posting one of the biggest gains in the S&P 500 and the most in the healthcare sector.

But economic sensitive sectors like materials and energy slumped amid worries over global growth. DuPont (NYSE: DD) tumbled nearly 3%, posting the biggest decline in the Dow Jones Industrial Average. Meanwhile, Alcoa (NYSE: AA) gained 0.4% ahead of its quarterly earnings report. In after hours, the stock was flat after reporting inline earnings on revenues that were better than consensus. The aluminum producer said it earned $0.06 per share on revenues that fell 9.4% from a year ago to $5.96 billion.

The energy sector declined despite crude oil moving higher and natural gas rallying 4%, as coal dragged down the sector. The best performers in the sector were Rowan Companies (NYSE: RDC) and Cabot Oil & Gas (NYSE: COG), which gained more than 1.9%, while Alpha Natural Resources (NYSE: ANR) plunged 7.5%, posting the biggest decline in the S&P 500.

In tech land, Seagate Technology (NASDAQ: STX) rallied to the top of the broad market index, jumping 4% after Fast Money trader Pete Najarian said late on Friday that the stock is a Buy despite the company cut its revenue and gross-margin expectations for its fiscal fourth quarter last week.

Semis underperformed after a report from an industry trade group showed that spending on equipment for making semiconductors will decline this year. Micron (NASDAQ: MU) tumbled 3.4%, while Broadcom (NASDAQ: BRCM) lost 2.9%.

Apple (NASDAQ: AAPL) gained 1.3% to $613.89 after Piper Jaffray analyst Gene Munster made positive comments on the stock and the iPad mini, which according to him, it will retail at $299 for the entry level of 16 GB. Mr. Munster estimated that the tech giant could garner 30% from the Android tablets already in the market, selling up to 6 million iPad minis in the December quarter.

Elsewhere, LinkedIn (NYSE: LNKD) tumbled more than 5% on news that Facebook (NASDAQ: FB) was planning on launching a jobs posting board. Shares of Facebook jumped 1.4%, closing above $32 per share.