Capital Gold Group Report: U.S. Stocks Plunge; S&P 500 Tumbles to Eight-Month Low

U.S. stocks plummeted, sending the Standard & Poor's 500 Index to its lowest level since Oct. 30, on concern over weakening growth in China and a slump in American consumer confidence.

Boeing Co., Caterpillar Inc. and Alcoa Inc. fell more than 5.5 percent after the Conference Board cut its estimate for Chinese economic growth. JPMorgan Chase & Co. slipped 3.8 percent after Moody’s Investors Service said the bank may face lost revenue from a cap on debit fees. Zimmer Holdings Inc. gained 0.1 percent for the only rise in the S&P 500.

The S&P 500 sank 3.1 percent to 1,041.24 as of 4 p.m. in New York, after falling as low as 1,035.18. The last time only one S&P 500 company rose was in September 2008. The Dow Jones Industrial Average dropped 268.22 points, or 2.7 percent, to 9,870.30.

“China set the tone in the morning and then it accelerated, with investors probably exiting the market ahead of the U.S. unemployment data on Friday,” said Peter Jankovskis, who helps manage about $2.2 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. “The market volatility is growing, which reflects the overhang from the situation in Europe and the slowdown in China.”

Among 24 industry groups in the S&P 500, none had a loss smaller than 0.9 percent, according to data compiled by Bloomberg.

Global Growth Prospects

The S&P 500 has tumbled 14 percent from this year’s high on April 23 on concern a sovereign-debt crisis in Europe and China’s moves to slow the world’s largest emerging economy will dent global growth. The Conference Board today revised its April leading economic index for China to a 0.3 percent rise, from a gain of 1.7 percent reported June 15.

Benchmark indexes extended early losses after the Conference Board’s gauge of confidence among consumers slumped to 52.9 this month from a revised 62.7 in May as Americans became pessimistic about the outlook for the labor market and the economy. The median forecast called for a decline to 62.5, and the gauge was lower than all projections in a Bloomberg News survey of 71 economists.

Banks were the biggest drag on the Stoxx Europe 600 Index as the rate lenders say they charge each other for three-month loans in euros in London rose to 0.688 percent, the highest in eight months, as institutions hoarded cash before a 12-month European Central Bank loan expires later this week.

Boeing, Caterpillar

Boeing led declines in the Dow Jones Industrial Average, slumping 6.3 percent to $63.04. Cliffs Natural Resources Inc., a mining company, dropped 11 percent to $48.49.

Caterpillar declined 5.5 percent to $60.85. The world’s largest maker of construction equipment said yesterday it is buying out a partner in a Chinese joint venture as part of plans to expand excavator production in the country.

Alcoa slid 6.3 percent to $10.34 on concern demand from China may weaken. Freeport-McMoRan Copper & Gold Inc., the world’s biggest publicly traded copper producer, dropped 5.6 percent to $61.07.

China’s exports face “strong headwinds” in the second half of the year from policy tightening measures and the European debt crisis, reducing prospects of a rebound in the stock market, Citigroup Inc. said in a report obtained yesterday.

“China growth is ebbing,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “If that’s the engine the world is looking at to pull us out of the doldrums then there’s been a disappointing number and disappointment there.”

Shanghai Composite

The Shanghai Composite Index retreated 4.3 percent to 2,427.05 today, the biggest drop since May 17 and the lowest close in 14 months.

JPMorgan, the bank headed by Jamie Dimon, slid 3.8 percent to $37.05. The second-biggest U.S. bank by assets, along with Bank of America Corp. and Wells Fargo & Co., may lose $1.38 billion in annual revenue from the proposed cap on credit-card swipe fees being considered by the U.S. Congress, Moody’s said in a report. Bank of America fell 4.4 percent to $14.57. Wells Fargo slumped 4.1 percent to $25.93.

Zimmer rose 0.1 percent to $54.60 for the only gain in the S&P 500. Since 1996, there have been three times that only one S&P 500 stock advanced, according to data compiled by Bloomberg. The last was on Sept. 29, 2008.

The benchmark index for U.S. stock options jumped the most in three weeks. The VIX, as the Chicago Board Options Exchange Volatility Index is known, increased 18 percent to 34.13. The index, which measures the cost of using options as insurance against declines in the S&P 500, is down from this year’s closing high of 45.79 on May 20 and above its 20 average over its two-decade history.

Technical Levels

The S&P 500 was testing levels watched by analysts who study charts and patterns.

“The S&P can break below 1,040 and go on to test the 1,000 zone,” said Dan Wantrobski, Philadelphia-based director of technical research at Janney Montgomery Scott LLC. “That would be a 38.2 percent retracement of the cyclical bull run off the March 2009 bottom to the recent April 2010 highs.”

Technical analysts who use the Fibonacci ratios described by Leonardo of Pisa in “Liber Abaci” in 1202 believe the price of an asset may reverse an earlier gain or decline after reaching certain levels. Among those thresholds are the midpoint between an asset’s high and low points as well as levels marking the recovery of 61.8 percent, 38.2 percent and 23.6 percent of reversals of the previous trend.

Micron Declines

Micron Technology Inc. sank 13 percent to $8.67. The company “reported modestly better-than-expected fiscal third- quarter results,” wrote UBS AG analysts in a report. “Despite this, we believe stable to declining price trends over the past month could be a precursor to further declines.”

Chipmakers and semiconductor-related shares in the S&P 500 slid 3.1 percent as a group. SanDisk Corp. fell 7 percent to $42.64. Teradyne Inc. slumped 7.7 percent to $9.95. Advanced Micro Devices Inc. retreated 7.1 percent to $7.48.

Casino companies slid after KeyBanc Capital Markets Inc. said the stocks’ valuation is “rich” given sluggish growth in the U.S. and the potential for government intervention in Macau.

Wynn Resorts Ltd. dropped 7.7 percent to $78.55. Las Vegas Sands Corp. sank 9.9 percent to $22.84. MGM Resorts International slipped 8.6 percent to $10.05.

Stocks retreated even after home prices in 20 U.S. cities rose in April from a year earlier as sales got a boost from a tax credit aimed at reviving the industry that triggered the worst recession since the 1930s. The S&P/Case-Shiller index of property values climbed 3.8 percent from April 2009, the biggest year-over-year gain since September 2006. The increase exceeded the median forecast of economists surveyed by Bloomberg News.

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