Optimism Takes a Hit, and So Do Stocks
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U.S. stocks fell last week, pushing the Standard & Poor's 500-stock index to the first back-to-back weekly declines since March, as the World Bank said the recession will be deeper than previously forecast and a report showing the U.S. savings rate is at its highest level in 15 years signaled that consumers may continue to pare spending.
Boeing tumbled 14 percent as it delayed its target for the first flight of the 787 Dreamliner. Nike lost 10 percent as it said orders declined 12 percent. ConocoPhillips sank 3.1 percent, and Apache lost 4.1 percent on oil's slump below $70 a barrel.
The S&P 500 declined 0.3 percent to 918.90 last week. The Dow Jones industrial average fell 101.34 points, or 1.2 percent, to 8438.39. The Nasdaq composite index added 0.6 percent to 1838.22.
"The question that has emerged is: Has the market gotten ahead of the economy?" said Walter "Bucky" Hellwig of Morgan Asset Management in Birmingham, Ala. "The consumer is hoarding cash, and that's an economic headwind."
The dollar dropped, pushing an index of its performance against currencies from six trading partners to a two-week low. China's central bank reiterated a call for a worldwide currency, adding to speculation that the country will diversify its cash reserves, the world's largest at more than $1.95 trillion.
The S&P 500 plunged 3.1 percent on Monday as the World Bank said unemployment and poverty will rise in developing nations and predicted a 2.9 percent contraction in the global economy this year. That compares with a prior estimate of a 1.7 percent decline. The Treasury will auction $32 billion of three-month bills and $30 billion of six-month bills tomorrow. They yielded 0.2 percent and 0.33 percent, respectively, in when-issued trading. One-month bills will be sold on Tuesday.
-- Bloomberg News
