New York – U.S. stocks fell Tuesday for the first time in four days, pulling the Dow Jones industrial average back from 12,000, on concern that technology companies will fail to live up to earnings forecasts.
Intel Corp., the world’s largest maker of semiconductors, sank after Goldman, Sachs & Co. said price competition may weigh on the shares. Chipmakers accounted for six of the seven biggest declines in the Standard & Poor’s 500 Index. Earnings reports after the close boosted Intel and brought down Motorola Inc., the world’s second-biggest maker of mobile phones.
“If we don’t have good economic growth, that provides some question marks to the underpinning of the stock market and the growth of earnings,” said Warren Koontz, who oversees $1.7 billion at Loomis Sayles & Co. in Boston.
The Dow industrials fell 30.58, or 0.3 percent, to 11,950.02. United Technologies Corp., the maker of Pratt & Whitney jet engines, helped drag down the average, along with Intel, as profitability trailed some estimates. After the close, shares of International Business Machines Corp. rose on higher profit.
The S&P 500 lost 5, or 0.4 percent, to 1,364.05. The Nasdaq Composite Index slid 18.89, or 0.8 percent, to 2,344.95. The benchmark indexes pared their losses in the afternoon after oil prices fell below $59 a barrel.
U.S. Treasury 10-year notes were little-changed, erasing their biggest intraday gain in almost two weeks, after a gauge of homebuilder confidence rose for the first time in a year. The dollar declined against the yen for a second consecutive day after a government report showed U.S. industrial production fell last month by the most in a year.
The National Association of Home Builders/Wells Fargo index of builder confidence rose to 31 from a 15-year low of 30 in September, the Washington- based association said. A reading below 50 means most builders view conditions as poor.
Evidence of stability in housing may challenge the view of bond-market bulls – including Bill Gross, manager of the world’s largest bond fund at Pacific Investment Management Co. – that falling property values will produce broad-based economic weakness.
The dollar was down slightly against the yen after the report on industrial production and another that showed producer prices fell the most since April 2003.
The reports signal “a continued slowdown in the U.S. economy,” said Kathy Lien, chief currency strategist at Forex Capital Markets LLC in New York. “The manufacturing sector is doing poorly. That brought down the dollar.”
Industrial production in the U.S. fell 0.6 percent last month, more than the 0.1 percent drop that was forecast, as car, furniture and electronic-equipment makers scaled back and cooler weather reduced demand for electricity, the Federal Reserve said.
Capacity utilization, which measures the proportion of plants in use, fell to 81.9 percent, from a revised 82.5 percent a month earlier.
Crude oil fell for the first time in four days on forecasts that U.S. inventories rose and skepticism OPEC will cut production by 1 million barrels a day.
