Stocks Dip on Fears About Global Growth, Russian Aggression

ECB President Mario Draghi Monthly Press Conference
Ulrich Baumgarten via Getty ImagesMario Draghi, president of the European Central Bank, warned Thursday that the crisis in Ukraine could dampen Europe's fragile recovery.
By STEVE ROTHWELL

NEW YORK -- Concerns about slowing global growth and the threat of rising tensions between Russia and the West pushed stocks lower on Thursday.

The stock market started the day higher as investors mulled the latest earnings reports and an encouraging report on jobs. By mid-morning, though, the market had given up its gains. While stocks slumped, government bond prices rose, pushing the yield on the 10-year Treasury note to its lowest level this year.

Stocks have slumped since the Standard & Poor's 500 (^GSPC) index closed at a record last month amid worries that the rising tensions between Russia and the West will hurt global economic growth. European Central Bank head Mario Draghi cautioned Thursday that the crisis in Ukraine could crimp the fragile recovery in the region.

"You're getting some good earnings, but it's just not enough to overwhelm the geo-political issues," said Drew Wilson, an equity analyst with Fenimore Asset Management.

The S&P 500 index fell 10.67 points, or 0.6 percent, to 1,909.57. The index closed at a record 1,987.98 on July 24. The Dow Jones industrial average (^DJI) fell 75.07 points, or 0.5 percent, to 16,368.27. The Nasdaq composite (^IXIC) fell 20 points, or 0.5 percent, to 4,334.97.

Phone and internet companies were among the day's biggest decliners. Windstream Holdings (WIN) fell 39 cents, or 3.4 percent, to $11.16 after the company reported that its earnings fell by 64 percent in the second quarter. The results missed analysts' expectations.

Eight of the 100 industry sectors in the S&P 500 fell. Health care and phone company stocks dropped the most, 1.2 percent and 1 percent respectively. Utilities stocks rose 1.1 percent, making them the biggest gainers, as investors bought safer assets.

The market had started the day higher as investors assessed the latest encouraging news from the job market.

Fewer people applied for U.S. unemployment benefits last week. Claims remain at relatively low levels consistent with stronger economic growth. Weekly applications fell 14,000 to 289,000, the Labor Department said.

Some positive earnings reports helped lift stocks in early trading.

21st Century Fox (FOX) rose $1.63, or 5 percent, to $33.96 after reporting better-than-expected fourth-quarter earnings late Wednesday. The company got a boost from films including "X-Men: Days of Future Past," ''Rio 2," and "The Fault in Our Stars." The company was adding to gains from a day earlier after dropping its bid for Time Warner (TWX) and announcing a stock buyback.

The gains for stocks were short-lived Thursday. The market started to head lower by lunchtime, and as stocks slumped, bond prices rose.

The yield on the 10-year Treasury note, which falls when prices rise, dropped to 2.41 percent from 2.48 percent on Wednesday. The yield on the note is at its lowest level in more than a year.

At the start of this year, many investors and analysts had expected 10-year Treasurys to fall as the economy continued its recovery and the Federal Reserve wound down its economic stimulus program. Instead, the opposite has happened. Bonds have rallied as inflation has remained low and doubts have arisen about the prospects for long-term growth.

U.S. Treasury securities also offer a higher yield than bonds issued by other governments. The yield on the 10-year German government bond is 1.06 percent, and French government bonds with the same maturity offer a yield of 1.5 percent.

Investors are also buying Treasuries as geopolitical tensions rise around the world.

"The Treasury market is going to continue to confound the bears," said Bill O'Donnell, chief Treasury strategist at RBS.

In commodities trading, the price of oil rose Thursday for only the second day in the past nine. There are concerns about intensifying violence in Iraq as the White House weighs air strikes to counter recent advances by insurgents.

Benchmark U.S. crude oil rose 42 cents to close at $97.34 a barrel on the New York Mercantile Exchange. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 85 cents to close at $105.44 on the ICE Futures exchange in London.

In metals trading, gold rose $4.30 to $1,312.50 an ounce and silver fell three cents to $19.99 an ounce. Copper rose a penny to $3.18 a pound. In currencies, the dollar fell to 102.03 yen and the euro fell to $1.3364.

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6 Comments

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frank1946

Paul Volcker was correct.

Printing $$$ prevents the Economy from growing.

No Budget means No Business Confidence !

August 08 2014 at 1:03 AM Report abuse -1 rate up rate down Reply
1 reply to frank1946's comment
dembaitnswitch

Obama's main mission is to bankrupt America, from 1-20-2009.

August 08 2014 at 3:40 AM Report abuse rate up rate down Reply
ccdae5

Let's get interest rates back up where they should be and quit printing free money. That will cause the stock market to "correct" to where it should be. It's time to get things back to normal. Crash it and let's move on.

August 07 2014 at 9:28 PM Report abuse +1 rate up rate down Reply
1 reply to ccdae5's comment
gee.effwye

Higher interest rates on the federal debt?

August 08 2014 at 12:15 AM Report abuse -1 rate up rate down Reply
johnskii

Jimmy Carter RELOADED........

August 07 2014 at 9:27 PM Report abuse -2 rate up rate down Reply
worried man

It is amazing the BS that the analysts come up with as to why big investors are selling. I have to assume that they are lying on government orders to do so .....or ?
There is a real threat now that the FED will raise interest rates. Banks and big investors have been getting cheap money and pumping it into the market because it is the only big game in town. The once popular money instruments are all but dead. Real estate is really not viable and there are no new growth sectors except maybe China because they now make everything on the planet. Therefore commodities are potentially hot. US hedge funds are all over the planet but are very private and not open to the average schmuck. Most of us may not live long enough to ever see a savings account paying 4%. Gold may have a brief resurgence unless the Soviets invade all the surrounding countries. Ebola is a greater danger than the Soviets even though they have nuclear missiles. What we really need is growth HERE in the US !

August 07 2014 at 7:24 PM Report abuse +2 rate up rate down Reply
1 reply to worried man's comment
welcome eric

Yes- still waiting for that gold "bubble" to burst- oh wait, it's not going to.

August 07 2014 at 11:16 PM Report abuse -1 rate up rate down Reply