Stocks fall amid caution over G20 summit
NEW YORK (AP) – Stocks fell Wednesday ahead of an upcoming meeting of world leaders and as Europe continues to grapple with government debt problems.
Not even an unexpectedly sharp drop in first-time claims for unemployment benefits was enough to lift share prices. The Dow Jones industrial average fell more than 55 points in late morning trading. Losses were spread across most industries, with technology stocks leading the pullback. Financial shares were among the best performers.
Google Inc., Cisco Systems Inc. and Oracle Corp. were among big technology companies whose shares fell.
Normally an upbeat jobs report would send stocks higher, but enthusiasm was kept in check ahead of a key meeting by world leaders. Members of the Group of 20 will be meeting Thursday and Friday in South Korea.
The meeting comes as countries like the U.S. and Japan try to weaken their currency to help stimulate economic growth. A global economic recovery has been slow and many developed countries like the U.S. have struggled to expand at a pace that will cut high unemployment.
Major European indexes all slid as worries grow about debt problems in Ireland. The euro fell below $1.37 for the first time in three weeks. Concerns about mounting government debt in many European countries have occasionally dragged down stocks around the world throughout the year. Countries like Ireland and Greece are facing rising debt with little signs of growth.
Gold prices dropped below $1,400 an ounce as the dollar strengthened. Other commodities also fell, pushing shares of materials stocks like Freeport McMoRan Copper & Gold Inc., Monsanto Co. and Dow Chemical Co. down more than 1 percent.
The dollar had been weakening against other currencies in recent weeks because of a recently announced program by the Federal Reserve to buy Treasury bonds in an effort to drive interest rates lower and spark spending and lending.
A weaker currency makes a country’s exports cheaper and more attractive overseas. Japan has been especially active in trying to weaken its currency because its economy is so reliant on companies like Sony Corp. and Toyota Motor Corp. that rely on exports.
The Dow fell 56.92, or 0.5 percent, to 11,289.83 in late morning trading. The Standard & Poor’s 500 index fell 5.65, or 0.5 percent, to 1,207.75.
The Nasdaq composite index, which is primarily technology stocks, fell 12.67, or 0.5 percent, to 2,550.31.
Uri Landesman, president at Platinum Partners, said Wednesday’s pullback is natural for a market that has been climbing nearly unchecked since early September. Major indexes have all touched highs for the year in recent days.
Bond yields rose, pushing interest rates higher. The yield on the benchmark 10-year Treasury note rose to 2.70 percent from 2.66 percent late Tuesday.
Britain’s FTSE 100 fell 1.1 percent, Germany’s DAX index dropped 1.1 percent, and France’s CAC-40 fell 1.4 percent.
In corporate news, General Motors said it earned $2 billion in the third quarter. The big profit came at the right time for the automaker. It is set for an initial public offering next week after struggling through bankruptcy and a government bailout. New car and crossover models and strong sales overseas helped GM.
The Labor Department said first-time claims for unemployment benefits fell more than economists’ had forecast and reversed a rise reported a week earlier. The claims number came after the government last week said that hiring by private employers rose at its fastest pace in six months.
The unemployment report came out a day earlier than usual because government offices are closed Thursday for Veterans’ Day. The stock market will remain open on the holiday.