Exchange traded funds continued sliding Thursday. Wall Street
analysts lowered their forecasts as companies reported
second-quarter results this week that are failing to meet
Bank of America/Merrill Lynch lowered its S&P 500 earnings
per share estimate to $102 for this year, down from $103.50, and
2013 earnings are projected to come in at $109 a share, down from
The forecast implies growth of 4% and 7%, respectively.
BofA/Merrill strategists said the lowered forecasts factor in
lower commodity prices and lower corporate profits from slower
But their year-end target for the index remained unchanged and
they expect the S&P 500 to rise about 8% by year's end from
That offset good news that initial jobless claims saw their
biggest drop since January. Claims fell 26,000 last week to
350,000 -- below the Street's estimate of 375,000 -- owing to
fewer auto plant closures for the summer and other seasonal
"While the dip in benefits seekers is welcome news, market
participants are more intently focused on yesterday's Federal
Open Market Committee notes release, which suggests that the
Federal Reserve is prepared to send in the cavalry on greater
weakness -- (though it's not prepared to act in the very
near-term)," Waverly Advisors wrote in a daily client note.
They advised clients who are heavily invested to protect
profits by cutting back positions if the market falls
In afternoon trade, the
SPDR S&P 500
) was down 0.32%.
SPDR Dow Jones Industrial Average (
) shed 0.10% as it fell for a sixth day straight.
PowerShares QQQ (
), a basket of the largest 100 nonfinancial stocks on the Nasdaq,
All three major U.S. indexes have broken below key technical
support at their 50-day moving averages for the second time in a
month. The next levels of price support lie at their long-term
200-day moving averages, which are 1% to 3% below Thursday's
IShares MSCI EAFE Index (
), tracking developed foreign markets, fell 1.02%.
IShares MSCI Emerging Markets Index (
) plunged 1.56%.
The global economy is slowing not only because of the European
recession but also because of "home-grown problems" in emerging
markets, says Ed Yardeni, president and chief investment
strategist of Yardeni Research.
In his daily briefing Yardeni and his colleagues noted:
In Brazil, the central bank board members voted unanimously
Tuesday to cut the benchmark Selic rate by a half point to 8%,
marking the eighth cut in a row in about a year. Brazil's
merchandise exports plunged 18.3% year over year in June.
Industrial production was down 5.7% year over year in May, to the
lowest level since November 2009.
In China, producer price index trends suggests economic growth
is slowing significantly. The PPI fell 2.1% year over year in
June, down from a recent cyclical high of 7.5% in July 2011.
That's the fourth straight negative reading and the lowest PPI
inflation rate since November 2009.
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