NEW YORK — Edgy investors sent stocks lower Monday ahead of U.S. corporate earnings reports and amid more signs of instability in Europe.
The Dow Jones industrial average closed down 36.18 points at 12,736.29. It was the Dow’s third straight day of declines.
The Standard & Poor’s 500 fell 2.22 points to 1,352.46, and the Nasdaq composite fell 5.56 points to 2,931.77. Health-care stocks rose the most, while stocks of materials companies fell the most.
Alcoa, one of the 30 stocks in the Dow, became the first major U.S. company to report second-quarter results after the market closed Monday.
The aluminum manufacturer beat the earnings-per-share estimates of Wall Street analysts by a penny, although revenue dropped because of weaker prices and pockets of declining demand in the slowing global economy.
Alcoa’s results are often seen as a harbinger for other major companies. So far, investor expectations are low. Wall Street forecasts a 1 percent decline in second-quarter earnings of S&P 500 companies compared with last year, according to Standard & Poor’s Capital IQ. That would be the first decline since the third quarter of 2009.
Kim Caughey-Forrest, senior equity analyst at Fort Pitt Capital Group, said many portfolio managers are afraid that this earnings season could bring bad surprises about stocks they’ve picked up earlier this year.
“It’s report-card time,” Caughey-Forrest said.
Investors were also spooked Monday by news from Europe, where Spain’s borrowing costs rose as finance ministers from the euro countries gathered in Brussels to finalize a rescue package for Spain’s banks.
The interest rate on Spain’s 10-year government bond rose to 7 percent. Greece, Ireland and Portugal all asked for help from their international lenders when their borrowing costs rose that high.
In Greece, a new three-party coalition government won a vote of confidence in parliament early Monday, ending a period of uncertainty that led to two elections in less than two months. Greece is in its fifth year of recession and has survived for two years on international rescue loans.
Spain is in better shape financially and can afford the high rates for a few weeks, at least. However, a long-term solution is badly needed to prevent the nation, which has an unemployment rate near 25 percent, from defaulting.
5
Length, in years, of Greece’s economic recession
