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Date Posted: 15:56:40 04/18/13 Thu
Author: Thursdaty Sparkling waterApril 18, 201350-1543-- (checkout)
Subject: U.S. Stocks Slide, Led by Morgan Stanley, as S&P 500 Breaks Below Key Level

U.S. Stocks Slide, Led by Morgan Stanley, as S&P 500 Breaks Below Key Level
19/04/2013 6:31AM

By Chris Dieterich

NEW YORK--Stocks continued their slide after a full slate of uninspiring corporate earnings reports provided little to compel investors to step in and buy shares.

The Dow Jones Industrial Average fell 81.45 points, or 0.6%, to 14537.14. The Standard & Poor's 500-stock index slid 10.4 points, or 0.7%, to 1541.61, its lowest close in six weeks. The Nasdaq Composite Index sank 38.31 points, or 1.2%, to 3166.36.

Stocks have seen big swings this week, alternating between gains and losses, starting with Monday's 266-point decline, the Dow's biggest of the year. Tuesday's rebound was nearly washed away by Wednesday's 138-point drop for the blue chips.

In another sign of flagging momentum, the S&P 500 broke through its 50-day moving average around 1543--a threshold watched closely by traders as a short-term pivot point--for the first time this year.

"Not holding the 50-day moving average is definitely a contributor to further downside pressure," said Michael Shea, managing partner at Direct Access Partners, noting the such a fall can set off sell orders triggered when stock prices drop below pre-set levels.

Quarterly earnings reports from a host of major corporations set the tone of trading. First-quarter earnings growth for 82 of the S&P 500's companies had declined 0.4% through Thursday morning, according to FactSet, on pace to mark the second year-over-year decline in earnings in the past three quarters. Meanwhile, corporate revenue is expected to rise 3.2% in the first quarter, well below growth of 6% in the first quarter last year, according to S&P Capital IQ.

"The revenue side of the equation looks challenged on the whole," said Bill Stone, chief investment strategist at PNC Asset Management Group. "That's a testament, unfortunately, to a global economy that continues to struggle."

Technology, consumer-discretionary and health-care stocks each slumped more than 1%. The financial sector also was weak after Morgan Stanley, which fell 5.4%, reported disappointing bond-trading results and sales that missed consensus forecasts.

UnitedHealth Group slumped 3.8%. The insurer's first-quarter earnings edged ahead of Wall Street's expectations, but revenue was lower than expected. The company also lowered its full-year revenue estimate by up to $2 billion.

Telecommunications stocks were a bright spot after Dow component Verizon Communications, which added 2.8%, posted first-quarter earnings that topped analyst estimates, though revenue came in shy of analyst estimates.

On the data front, U.S. workers applying for jobless benefits rose for the fourth time in five weeks, the Labor Department said. Initial jobless claims, an indication of layoffs, increased by 4,000 to a seasonally adjusted 352,000 in the most recent week, slightly more than forecast.

Business conditions for mid-Atlantic manufacturers remain barely positive this month, as the Federal Reserve Bank of Philadelphia's index of general business activity slowed in April from March. Separately, an index of leading economic indicators posted an unexpected fall in March, as consumers turned gloomy on the economic outlook.

Investors have said that optimism about the pace of economic growth has diminished over the past month. After strong starts to each of the past three years, economic conditions have consistently weakened in the spring.

"A month ago, I thought that we might have escaped the spring swoon. Now, I'm thinking we haven't," said Kim Forrest, senior equity analyst at Fort Pitt Capital Group, which manages about $1.3 billion. Ms. Forrest said her firm is looking for stock drops as opportunities to buy stocks in sectors that have lagged behind this year's rally, like industrials and technology.

Apple continued its slide, down 2.7%, closing under $400 a share for the first time since 2011.

EBay dropped 5.9% after a downbeat current-quarter earnings outlook overshadowed first-quarter earnings that beat expectations.

American Express edged up 1.4% after its first-quarter revenue rose less than expected, offsetting earnings that were slightly above forecasts. PepsiCo gained 3% after exceeding earnings estimates. Union Pacific climbed 4% after its quarterly earnings rose 11% on stronger revenue, though weaker shipments of coal and agricultural products continued to weigh on the railroad operator's freight volume.

In Europe, the Stoxx Europe 600 finished flat. Germany's DAX index lost 0.4%.

Asian stocks were mostly lower, tracking weakness in U.S. markets. China's Shanghai Composite Index edged up 0.2% after data showing foreign direct investment flows into the country rose more than expected. Japan's Nikkei Stock Average lost 1.2%, and Australia's S&P ASX 200 gave up 1.6%.

Gold rose 0.7%, to settle at $1,392 a troy ounce, while crude-oil prices climbed 1.2%, to settle at $87.73 a barrel. The dollar slipped against the euro and advanced versus the yen. The yield on the 10-year Treasury note fell to 1.685% as prices rose.


Write to Chris Dieterich at christopher.dieterich@dowjones.com


(END) Dow Jones Newswires

April 18, 2013 16:31 ET (20:31 GMT)

Copyright (c) 2013 Dow Jones & Company, Inc.

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