Market Snapshot
U.S. stocks drop on global economic forecast
NEW YORK (MarketWatch) -- U.S. stocks declined Monday, with two of three benchmark indexes off for a seventh in eight sessions, after the International Monetary Fund reduced its global economic outlook.
"There is worry about the China demand story and then we have a game of chicken between Congress and the fiscal cliff, and then there's is [Federal Reserve Chairman] Ben Bernanke and monetary policy, knowing he can't do it all by himself," said Art Hogan, a managing director at Lazard Capital Markets.
"Even though we have sluggish economic growth, we don't necessarily need to go careening off the cliff into a double-dip recession, so we'll see if we can get fiscal policy stimulus," Hogan said of the inability of Democrats and Republicans to reach agreement before a slew of tax cuts expire at the end of the year and nearly $1 trillion in across-the-board spending cuts are implemented.
The Dow Jones Industrial Average
(DJIA)
shed 49.88 points, or 0.4%, to 12,727.21, with
A World Trade Organization panel said in a ruling published Monday that China discriminates against foreign bank card suppliers by maintaining a monopoly supplier for clearing some transactions. China's practice has restricted Amex and other payment processors, including
The S&P 500 index (SPX) declined 3.14 points, or 0.2%, to 1,353.64 with the industrial and consumer-discretionary sectors the worst performers and energy faring best among its 10 industry groups.
On the New York Mercantile Exchange, oil futures (CLQ2) rose $1.33 to $88.43 a barrel. Read more on oil.
The Nasdaq Composite (COMP) fell 11.53 points, or 0.4%, to 2,896.94.
For every seven stocks rising roughly eight fell on the New York Stock Exchange, where 602 million shares traded. Composite volume neared 2.9 billion.
Fed ahead
Stocks finished the first trading day of the week off session lows, with losses moderating as the U.S. dollar slid and the euro gained.
The U.S. dollar (DXY) fell against other major currencies, including the euro (EURUSD) . Read more on currencies.
"If we're going to look for improvement in the equity market, we have to see the dollar stop going up every day," said Ken Tower, senior analyst at Quantitative Analysis Service Inc. While a strong dollar at times can be positive, its recent rise is largely an indication of worried investors looking to park assets in a relatively safe harbor.
"To the extent it's because people are afraid to put their money anywhere else, that's not so great," said Tower.
The IMF reduced its 2013 global growth forecast to 3.9% from the 4.1% projected in April.
Figures from the Commerce Department had retail sales falling a worse-than-expected 0.5% last month. See story on retail sales.
"We've got the usual pull between the lack of resolution on the euro-zone crisis and doubts about the strength of the U.S. economy," said Tower.
Separately, a gauge of manufacturing in the New York region in July expanded at a faster-than-anticipated pace. See story on manufacturing conditions.
Bernanke on Tuesday begins two days of testimony on Capitol Hill, with Lazard's Hogan expecting the Fed chairman to reiterate what was said in minutes of the central bank's last policy meeting.
"They may lower interest rates on reserves from 25 basis points to zero, that seems to be in vogue now, or increase the size of the Fed's balance sheet, but Bernanke will save his silver bullet for the crisis we bring upon ourselves," said Hogan of the possibility of another round of quantitative easing from the Fed.
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