New York: US stocks fell on Tuesday after disappointing corporate news from 3M Co and McDonald’s, while negative developments in global credit markets caused a shift to safe-haven assets.
Equities faced pressure from a stronger US dollar after Dubai’s unresolved debt problems and Fitch Ratings’ downgrade of Greece’s bond rating dented risk appetite.
US corporate news raised some doubts about consumer spending, a key requirement for the recovery to take hold.
Diversified manufacturer 3M fell 1% to $77.11 after a weaker-than-expected outlook, while McDonald’s closed down 2.1% at $60.61 after reporting disappointing sales for a second straight month.
“We are seeing signs that indicate the global economy is not recovering as fast as expected, and at times of uncertainty, people run to the safe dollar,” said Keith Springer, president of Capital Financial Advisory Services in Sacramento, California.
The Dow Jones industrial average fell 104.14 points, or 1.00%, at 10,285.97. The Standard & Poor’s 500 Index closed down 11.31 points, or 1.03%, at 1,091.94. The Nasdaq Composite Index shed 16.62 points, or 0.76%, at 2,172.99.
After the closing bell, Texas Instruments Inc raised its fourth-quarter earnings target and said revenue would be at the high end of its forecast range, but shares of the chipmaker fell 2.4% to $25.71 as some investors had even higher expectations.
In another sign on Tuesday of weak consumer spending, Kroger Co shares dipped 11.9% to $20.13 after the supermarket operator reported quarterly results far below expectations and cut its full-year forecast.
The S&P Consumer Staples index slipped 1.2%.
The greenback gained 0.5% against a basket of six other major currencies, pressuring risk-associated assets such as US crude oil, which dipped 1.4% to $72.96 a barrel.
Energy shares were among the top drags. Exxon Mobil was down 1.1% at $72.95 and Chevron fell 1.8% to $76.76. The S&P energy index shed 1.7%.
Another source of nervousness about the global recovery was an unexpected decline in German industrial output.
The disappointing earnings news overshadowed optimism late Monday from FedEx Corp, which gained 2.7% to $89.88 after forecasting second-quarter earnings would easily beat analysts’ estimates.
Volume was light on the New York Stock Exchange, with 1.18 billion shares changing hands, below last year’s estimated daily average of 1.49 billion, while on the Nasdaq, about 1.97 billion shares traded, also below last year’s daily average of 2.28 billion.