US, European stocks fall as global growth fears weigh

U.S. stocks fell Tuesday, wiping out Monday’s gains in another sign that the nearly three-month rally could be on shaky ground.

Major U.S. stock indexes have fallen three of the past four trading days, and the price of U.S. crude oil has declined for three consecutive sessions, losing more than 5% in that period. All S&P 500 sectors fell Tuesday.

The index had bounced back quickly after losing 11% in the first roughly six weeks of the year. But gains have tapered off and investors have become wary, meaning any cracks in global economic growth can spur a pullback, analysts said.

Tuesday’s declines followed the fall in oil prices, a drop in Chinese manufacturing and a forecast that growth in Europe this year will be weaker than previously expected.

‘Our clients are very edgy, they’re nervous. The market drops like a rock into mid-February and then rallies from there, two very quick moves in a short time,’ said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.

The Dow Jones Industrial Average lost 140.25 points, or 0.8%, to 17750.91. The S&P 500 fell 18.06 points, or 0.9%, to 2063.37, and the Nasdaq Composite dropped 54.37 points, or 1.1%, to 4763.22.
U.S.-traded crude fell 2.5% to $43.65 a barrel, weighing on energy stocks.

Among the biggest decliners in the sector was Chesapeake Energy, which fell 79 cents, or 12%, to $5.80 and Marathon Oil, which dropped 76 cents, or 5.6%, to 12.79.

The yield on the 10-year U.S. Treasury note fell to 1.800% from 1.865% on Monday. Yields have fallen four of the past five sessions as prices rose.

‘Nothing is adding confidence to the health of the global economy,’ said Kenny Polcari, director at brokerage O’Neil Securities.

He added Tuesday’s selling in the stock market represented a breather as shares have approached records. On Monday, U.S. stocks posted their biggest one-day advance in more than two weeks, putting the Dow industrials and the S&P 500 within 2.3% of their highest levels hit last May.

‘There’s no real reason at the moment for the market to be making new highs,’ Mr. Polcari said.
Indeed, questions remain about the endurance of the stock-market recovery. Last week a reading of first-quarter growth for the U.S. economy missed expectations.

Corporate earnings have been lackluster. With more than 70% of companies in the S&P 500 reporting, corporate earnings are on track to fall 7.3% in the first quarter, according to FactSet. Projections show second-quarter earnings are also set to contract.

On Tuesday, Halliburton’s quarterly loss widened, sending shares down 1.61, or 3.8%, to 40.44.

Quarterly results from Pfizer and CVS Health came in above forecasts. Shares of Pfizer gained 90 cents, or 2.7%, to 33.70, and CVS shares gained 2.47, or 2.4%, to 103.92.

Apple shares gained 1.54, or 1.6%, to 95.18, snapping an eight-session losing streak, the iPhone-maker’s longest since July 1998.

‘The market was appropriately conservative going into the quarter, but fortunately companies have been able to beat estimates,’ said John Bailer, portfolio manager at the Boston Company Asset Management. ‘What we need is earnings growth and earnings surprises,’ he said.

Copper prices fell sharply after a private gauge of Chinese manufacturing showed a decline in April, adding to concerns over the health of the world’s second-largest economy.

The European Commission said Tuesday that growth in the eurozone and the wider European Union will be slightly weaker this year than previously forecast, citing the economic slowdown in China as well as geopolitical tensions and uncertainty.

The Stoxx Europe 600 declined 1.7%. Mixed first-quarter earnings results weighed on shares of European banks. Shares in UBS fell 7.5% after the Swiss lender reported a sharp fall in first-quarter profit, while Germany’s Commerzbank declined 9.6% after it missed consensus estimates and reduced its profit outlook for the full year.

Shares in Hong Kong fell 1.9%. The Shanghai Composite Index gained 1.8% as the market reopened after a holiday, spurred by President Xi Jinping’s recently stated support for the “healthy development” of the country’s stock markets.

Australia’s S&P ASX 200 gained 2.1% after the country’s central bank cut interest rates for the first time in a year. The Australian dollar fell sharply, weakening 2.3% against the dollar to $0.7488.
Markets in Japan were closed for a holiday.