Investment

US stocks tumble as economy slows down

By Elizabeth Stanton (China Daily)
Updated: 2010-08-23 13:38

NEW YORK - US stocks fell for a second straight week as a jump in jobless claims and an unexpected slump in Philadelphia-area manufacturing suggested a rebound in corporate profit growth would not be sustained.

3M Co, United Technologies Corp and Chevron Corp lost at least 3 percent to lead the Dow Jones Industrial Average

to a one-month low. Sears Holdings Corp sank 7.5 percent as sales trailed analysts' estimates. Benchmark indexes erased three days of gains on August 19 as initial jobless claims rose to the highest since November and the Federal Reserve Bank of Philadelphia's factory gauge dropped to the lowest in a year. The Standard & Poor's 500 Index fell 0.7 percent last week to 1071.69, leaving it down 3.9 percent on the year. Energy shares in the index retreated 2.3 percent, the most among 10 industry groups, as US petroleum stockpiles grew to the highest level in at least 20 years. The Dow average dropped 89.53 points, or 0.9 percent, to 10213.62.

"The economy is really slowing down," said Wayne Wilbanks, of Wilbanks, Smith & Thomas Asset Management in Norfolk, Va. "Balancing the government's budget is going to mean cutting government spending, which will have a significant impact on the economy and corporate profits."

Weakening data on home construction and manufacturing reinforced concern US companies would not see enough revenue growth in the coming quarters to support further improvement in profits.

Bloomberg News