U.S. Stocks Tumble After Durable Goods Orders Plunge
By Stephen Kirkland and Jeremy Herron Jan 27, 2015 11:50 AM ET
U.S. stocks tumbled, sending the Dow Jones Industrial Average to its biggest drop since October, as a slide in durable-goods orders and disappointing results from Caterpillar Inc. to Microsoft (MSFT) Corp. heightened concern over the economy’s strength. Treasuries climbed with gold.
The Standard & Poor’s 500 Index (SPX) sank 1.4 percent at 11:47 a.m. in New York, while the Dow fell 347 points, or 2 percent. The Stoxx Europe 600 Index lost 1 percent, declining from a seven-year high. The euro climbed 1.2 percent to $1.1368. The yield on 10-year Treasuries (USGG10YR) fell five basis points to 1.77 percent, while the rate on Greek debt jumped 36 basis points to 9.46 percent. The Bloomberg Dollar Spot Index fell 0.6 percent. U.S. natural gas advanced 3 percent as a snowstorm blanketed the country’s northeast. Gold gained 1.1 percent to $1,294.30.
Wall Street prepared for a full day of trading despite the storm that shut down travel around New York City overnight and during part of the morning. Caterpillar (CAT), the world’s largest manufacturer of mining and construction equipment, reported profit that missed estimates, while Microsoft’s software-license sales to businesses trailed estimates and Siemens posted a decline in first-quarter profit. Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies.
“Currency headwinds, as well as evidence of a continual deceleration of global growth, is having a major impact on quarterly results,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a phone interview. “Durable goods orders were somewhat disappointing, which scotches any optimism for today’s trading session.”
Durable Goods
Orders for U.S. durable goods -- items meant to last at least three years -- decreased 3.4 percent in December after falling 2.1 percent the prior month, Commerce Department data showed. Separate reports showed U.S. consumer confidence surged more than forecast, while purchases of new homes increased 11.6 percent in December.
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