Stocks pulled back sharply today as Wall Street was jolted by warnings on earnings from some big consumer products companies and by another jump in crude oil prices.
Colgate-Palmolive Co. and Unilever cut their profit forecasts for the remainder of the year, prompting investors to sell not only their stocks but also those of competitors such as Procter & Gamble and Gillette.
Procter & Gamble was the big loser among stocks in the Dow Jones industrial average, which fell 80 points to 10,204.89. The Standard & Poor's 500 stock index fell six points to 1,122.20. The Nasdaq Stock Market composite index slipped two points to 1,908.07.
Also dragging down the Dow was Citigroup Inc. Shares of the nation's biggest financial firm were downgraded by analysts today in response to action taken last week by regulators in Japan. They shut down Citi's private banking operation in Japan amidst charges of fraud and money laundering.
Citigroup suffered its biggest one-day loss in shares price in more than a year while shares of Colgate-Palmolive and Unilever took their worst hit in several weeks.
Just as Coca-Cola did last week, those two companies cautioned that profits for the rest of the year will be less than expected because consumers are cutting back their spending.
Wall Street is becoming skittish about corporate earnings for the third quarter of the year -- which ends in just two weeks. Recently several computer industry companies have warned that their business is weakening. That softness seems to be spreading to consumer products companies.
Consumers' ability to spend is being undercut by the rebound in oil prices, which have increased rapidly in the past 10 days. Today on the New York Mercantile Exchange, crude oil for delivery next month climbed 76 cents a barrel to $46.35, the highest level in a month.
Despite those negatives for the economy, Wall Street expected the Federal Reserve to raise interest rates again Tuesday, when it meets for the last time before the U.S. presidential election. Fed officials insist the economy is doing well enough that rates can be returned to normal levels. The consensus on The Street is that the Fed will boost the rate on overnight loans to banks from 1.5 percent to 1.75 percent, which will prompt banks to boost their prime rate from 4.5 percent to 4.75 percent.