US STOCKS-Wall St drops on Deere profit miss, economy fears
U.S. stocks fell on Wednesday as rising oil prices, a profit shortfall by manufacturer Deere & Co and disappointing retailer outlooks and earnings added to worries about the health of the U.S. economy.
Shares of Deere, whose results also reflected the widening impact of the U.S. housing slump, slid almost 8 percent, and dragged along other big manufacturers, including Caterpillar Inc , down 4 percent.
Shares of financial services companies, including banks, also took a beating on fears of more mortgage-related losses. In addition Wednesday marks the expiration of a rule that helped stem abusive short selling in shares of some 19 U.S. financial companies, including Wall Street banks.
“People are worried about the impact the credit crunch is going to have on consumers,” said Eric Kuby, chief investment officer at NorthStar Investment Management Corp in Chicago. “The retail sales number this morning was another data point suggesting that the economy is weakening and the consumer is pulling back on their purchases.”
The Dow Jones industrial average fell 134.91 points, or 1.16 percent, to 11,507.56. The Standard & Poor’s 500 Index fell 9.30 points, or 0.72 percent, to 1,280.29. The Nasdaq Composite Index declined 8.69 points, or 0.36 percent, to 2,421.92.
A stronger-than-expected rise in July import prices added to investors’ concerns due to signs that even as the economy slows, price pressures are mounting. Another report showed retail sales fell in July, albeit in line with expectations. For more see [ID:nN13329163].
Deere shares declined to $63.82 on the New York Stock Exchange, where shares of Caterpillar, a maker of bulldozers and excavators, dropped to $68.88.
Shares of General Electric , also an economic bellwether, were down 1.4 percent at $29.33, while those of plane maker Boeing slipped 2.2 percent to $64.49.
On the retail front, department store operator Macy’s reported a lower quarterly profit and forecast lower sales at stores open at least a year. Its stock fell 2.5 percent to $19.76.
Women’s apparel retailer Liz Claiborne Inc , home to the Juicy Couture and Kate Spade store chains, cut its 2008 profit forecast, citing economic concerns. Its outlook overshadowed a stronger-than-expected quarterly profit, sending the stock tumbling 14.4 percent to $12.77. [ID:nN13317594].
Among financials, shares of Bank of America , the No. 2 U.S. bank, fell more than 6 percent to $29.20 and Citigroup , the largest U.S. bank, was down 3 percent at $17.98. The S&P financial index fell 2.9 percent.
Technology shares also fell on concerns that the economic slowdown will hurt business spending. Research In Motion was the top drag on the Nasdaq, falling 1 percent to $127.01 and offsetting a rise in shares of Apple Inc following news it will expand sales of its iPhone in an alliance with top U.S. electronics chain Best Buy .
Since a U.S. Securities and Exchange Commission emergency rule went into effect July 21, short sellers have been required to pre-borrow stock in mortgage finance giants Freddie Mac and Fannie Mae and 17 Wall Street firms such as Goldman Sachs before executing a short trade
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