U.S. stocks fell, erasing the weekly gain for the Standard & Poor’s 500 Index, on growing concern about Greece’s debt crisis and speculation Congress won’t pass President Barack Obama’s $447 billion plan to boost the economy.
JPMorgan Chase & Co. (JPM) and Citigroup Inc. slipped at least 2.6 percent, following declines in European lenders. Chevron Corp. and Alcoa Inc. (AA) dropped more than 1.9 percent as a rising dollar undermined the appeal of commodities. McDonald’s Corp. (MCD), the world’s largest restaurant chain, slumped 4.5 percent as August sales trailed analysts’ estimates.
The S&P 500 slid 2 percent to 1,161.67 at 11:24 a.m. in New York. All 10 groups in the gauge retreated. The Dow Jones Industrial Average declined 248.24 points, or 2.2 percent, to 11,047.57 today. Stocks extended losses as Germany set plans to shore up German banks in the event that Greece defaults, according to three coalition officials.
“The market will be jittery,” James Dunigan, chief investment officer in Philadelphia for PNC Wealth Management, said in a telephone interview. The firm oversees $109 billion. “There’s that nagging thought that we can continue to have a downward spiral in Europe. There’s concern of a default, of risk in banks, of a liquidity crisis. In the U.S., even as president Obama made an effort to put that plan together, there’s not a whole lot of confidence that Congress will pass.”
Benchmark gauges fell yesterday as Federal Reserve Chairman Ben S. Bernanke disappointed investors by not detailing new plans to boost growth in the world’s largest economy in a speech to economists in Minneapolis. Bernanke stopped short of signaling what he thinks is the Fed’s best option to aid the economy, repeating points from his speech on Aug. 26 in Jackson Hole, Wyoming.
Global Stocks Slump
Global stocks fell today as German two-year yields declined to a record. Ministers from the Group of Seven nations will meet in Marseille, France, amid mounting bets on a Greek default. Chancellor Angela Merkel’s government is preparing plans to shore up German banks in the event that Greece fails to meet the terms of its aid package and defaults, said three coalition officials who spoke on condition of anonymity.
President Obama channeled the national frustration with the economy that threatens his political standing and challenged the U.S. Congress to pass a $447 billion jobs plan tilted heavily toward the Republican prescription of tax cuts. The president, speaking before a joint session of Congress, demanded six times that lawmakers act “right away.”
“For people hoping for a quick injection of economic activity, that’s not what Obama’s plan portends,” Peter Sorrentino, a senior money manager at Huntington Asset Advisors in Cincinnati, said in a telephone interview. The firm oversees $14.8 billion. “There’s a perception that it’s going to be difficult to pass it. Some people are concerned that it might not have worked last time. So, why would this be any better?”
Most-Dependent
The Morgan Stanley Cyclical Index of companies whose earnings are most-dependent on economic growth dropped 1.9 percent. The KBW Bank Index (BKX) of 24 stocks slid 1.5 percent.
JPMorgan declined 2.7 percent to $32.62. Citigroup fell 2.6 percent to $27.24. Chevron lost 1.9 percent to $96.55. Alcoa retreated 2.7 percent to $11.71.
McDonald’s Corp. slumped 4.5 percent, the most in the Dow, to $84.67. Sales at stores open at least 13 months rose 3.5 percent, the Oak Brook, Illinois-based company said today in a statement. Analysts projected a gain of 5 percent, the average of seven estimates compiled by Bloomberg. U.S. sales advanced 3.9 percent, missing analysts’ estimates for a 4.5 percent gain.
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