Wall St. falls 1 percent on global growth concerns

October 7
7:27 PM 2014

U.S. stocks ended sharply lower on Tuesday, with major indexes falling 1 percent in heavy trading, as weak data out of Germany raised concerns about the strength of global growth ahead of the start of earnings season.

The International Monetary Fund cut its global economic growth forecasts for the third time this year, suggesting the environment remains difficult for companies, especially ones with multinational exposure.

The day's losses were broad, with all ten primary S&P 500 sectors ending lower, although cyclical shares - tied to the pace of economic growth - led the decline. Industrial shares .SPLRCI lost 2.4 percent, while financials .SPSY shed 1.8 percent and material companies .SPLRCM sank 1.8 percent.

Joy Global Inc (JOY.N) fell 4.2 percent to $51.69 while Caterpillar Inc (CAT.N) lost 3.4 percent to $94.70 as the biggest decliner on the Dow. Boeing Co (BA.N) lost 2.3 percent to $123.32.

German industrial output in August slid 4 percent, the biggest fall in 5-1/2 years, a day after a report showed industrial orders had their biggest monthly drop since 2009.

"The number was very weak, which makes for a tough backdrop. I don't think this is a trend of something that will get horrible, but it is weak and current valuations demand that data be better than weak," said Hayes Miller, who oversees about $57 billion as the Boston-based head of asset allocation in North America at Baring Asset Management.

With the day's decline, the S&P 500 fell back below its 100-day moving average, a sign of weakening near-term momentum. The CBOE Volatility index .VIX rose 11 percent to 17.2, near a level that has recently been taken as an indication the market is oversold.

The Dow Jones industrial average .DJI fell 272.52 points, or 1.6 percent, to 16,719.39, the S&P 500 .SPX lost 29.72 points, or 1.51 percent, to 1,935.1, ending at its lowest level since Aug. 12. The Nasdaq Composite .IXIC dropped 69.60 points, or 1.56 percent, to 4,385.20.

Coca-Cola Co (KO.N) was the only one of the 30 Dow components to end higher on the day, up 0.7 percent to $43.92. The beverage giant moved within a dollar of its all-time intraday high of $44.44, hit on July 15, 1998.

Shares of Yum Brands Inc (YUM.N) fell 0.5 percent to $69.35 in extended trading after the fast food chain operator cut its full-year outlook, citing weakness in Chinese sales.

Declining issues outnumbered advancers on the NYSE by 2,379 to 671, for a 3.55-to-1 ratio on the downside; on the Nasdaq, 2,188 issues fell and 516 advanced for a 4.24-to-1 ratio favoring decliners.

The benchmark S&P 500 index posted 8 new 52-week highs and 15 new lows; the Nasdaq Composite recorded 15 new highs and 188 new lows.

About 6.43 billion shares traded on all U.S. platforms, according to BATS exchange data, below the average of 7.27 billion over the past five sessions.

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