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Stocks fall for a fourth straight day as technology profits and the price of crude oil drop
NEW YORK (AP) ¯¯¯ Stocks are dropping for the fourth straight day Tuesday following a profit slump at technology companies and steep decline in oil prices, which sent energy stocks sharply lower.
A half-hour before the closing bell, the Dow Jones industrial average was down 106 points at 12,630.
Chip maker Advanced Micro Devices fell sharply after reporting that a slowdown in China and Europe led to an 11 percent slump in second-quarter revenue. The company had previously forecast a gain of 3 percent. Other technology companies also fell.
The bad news outweighed hopeful developments in Europe. Early Tuesday, European finance ministers agreed on the terms of a bailout for Spain's banks. The first installment of $37 billion in aid can be ready by the end of the month. Still, investors were concerned that some details seemed to be missing from the plan.
Adding to the uncertainty was a slew of upcoming corporate profits reports. Financial analysts expect companies in the S&P 500 will report earnings fell 1 percent in April through June from a year ago. That would be the first drop in nearly three years.
"The past quarter was great, but going forward many companies may have problems," said Joe Kinahan, chief derivatives strategist at TD Ameritrade, a brokerage. "People are confused about what to think."
The Standard & Poor's 500 was down 15 points at 1,338. The S&P was headed for its longest slump since May 18. The Nasdaq composite fell 38 points to 2,893.
A resolution to a labor dispute in Norway weighed on oil prices, which pushed energy stocks lower. Early Tuesday, the Norwegian government intervened to end a strike that threatened North Sea oil production.
Benchmark crude oil fell $2.08 to $83.91 a barrel in New York. Major energy companies fell as a result, including Occidental Petroleum, down $2.07 at $83.12, and ConocoPhillips, down 90 cents at $53.43.
Natural gas producers took a hit from a sharp drop in the price of natural gas, which was down nearly 5 percent at $2.73 per 1,000 cubic feet. Cabot Oil & Gas slumped $1.27 to $39 and Chesapeake Energy gave up $1.31 cents to $18.67.
Also weighing on commodities was a report from China that import growth fell in half in June from the prior month, a signal that its economy may be slowing more than expected. The Chinese economy, the world's second biggest, is growing at its slowest pace since the 2008 financial crisis.
Copper fell 1 percent to $3.40 per pound. China is a big importer of the metal.
In Europe, the deal to aid Spain helped push the yield on its benchmark 10-year government bond down to 6.8 percent. On Monday, that country's key borrowing rate surged to 7 percent, a dangerously high level. The lower yield means investors are less fearful about the country having trouble paying its debts.
Portugal, Ireland and Greece all had to ask for help from international lenders after spikes in their own borrowing rates made it unaffordable for them to raise money from selling bonds on the open market. Spain is the largest European country to date to seek international assistance.
In corporate news, Applied Materials, which makes equipment for chipmakers, cut its fiscal year profit and sales estimates because of weak demand. The stock fell 30 cents to $10.71. AMD, the chip maker hurt by slumping sales in China, plunged 65 cents to $4.97.
Embattled BlackBerry maker Research in Motion fell 42 cents to $7.38. The company's CEO, Thorsten Heins, told a shareholders meeting that he isn't satisfied with the company's performance. Two weeks ago the company announced disappointing earnings, plans to cut 30 percent of its workforce and the latest delay in BlackBerry 10.
Alcoa lost 41 cents to $8.35 after a financial analyst cut his estimate for the company's 2012 earnings. The aluminum maker was the biggest loser among the 30 companies in the Dow index. Alcoa reported Monday that it beat analyst estimate for earnings in the second quarter but that revenue dropped due to slowing world demand for the metal.