Market sinks amid gloomy outlook on global economy
NEW YORK (AP) -- Stocks slumped Tuesday on Wall Street after the International Monetary Fund predicted weaker world economic growth and as investors waited for what they expected to be lower corporate earnings.
The Dow Jones industrial average declined 110.12 points, or 0.8 percent, to 13,473.53. The Standard & Poor’s 500 index dropped 14.40 points, a hair under 1 percent, to 1,441.48.
The Nasdaq composite index lost 47.33 points, or 1.5 percent, to 3,065.02.
The slide came on the five-year anniversary of record high closes for the Dow and S&P 500. The Dow is about 700 points off its all-time high, 14,164.53.
Investors were discouraged by an International Monetary Fund report released overnight that said the global economy was weakening and the downturn afflicting developing nations has begun to spread.
The weak forecast came one day after the World Bank cut its estimate for growth in China, the world’s second-largest economy, and for developing countries across Asia.
The IMF forecasts that the world economy will expand 3.3 percent this year, down from the estimate of 3.5 percent growth it issued in July. Its forecast for growth in 2013 is 3.6 percent, down from 4.1 percent in April.
Overall, analysts expect earnings at S&P 500 companies to be down compared with last year, the first decline in almost three years.
Talley Leger, investment strategist at Macro Vision Research, noted that the IMF report came while Greek protests erupted again in Athens over budget-cutting measures and after a downgrade of Cyprus’ credit rating on Monday.
"It’s all negative headlines today," Leger said. "There’s a lot of European fears."