Stock markets slip as World Bank cuts outlook
U.S. stocks slipped after the World Bank scaled back its forecast for the global growth this year, citing a tough winter in America and the political crisis in Ukraine. Delta Air Lines fell the most in three months on worries about the outlook for airline profits.
KEEPING SCORE: The Standard & Poor’s 500 index fell ten points, or 0.5 percent, to 1,940 as of 1:20 p.m. Eastern time. The Dow Jones industrial average dropped 121 points, or 0.7 percent, to 16,824. The Nasdaq composite slipped 21 points, or 0.5 percent, to 4,316.
SLOWER GROWTH FORECAST: The World Bank said late Tuesday that it expects the world economy to grow 2.8 percent this year instead of the 3.2 percent it predicted in January.
TAKING A PAUSE: Despite declines Tuesday and early Wednesday, the S&P 500 has been on a slow and steady climb since April and is now up 5 percent for the year. In recent weeks, encouraging economic reports have pushed the index to a string of all-time highs, with its latest record of 1,951.27 occurring Monday.
KEEPING THE FAITH: The rally in stocks should continue this year as the economy strengthens, said James Lui, global market strategist at JPMorgan Funds. In the last month, stock gains have been led by the technology and consumer discretionary sectors, which should benefit more from stronger growth. This move "is going to be what drives the market further along," Lui said.
AIRLINE TURBULANCE: Delta dropped $1.30, or 3.1 percent, to $40.60, making it the second-biggest loser among S&P 500 stocks. The sharp decline came after Germany’s Lufthansa warned of smaller profits caused by weaker passenger demand. Lufthansa AG cut its forecast for 2014 and 2015 operating profit due to the weaker demand and strikes, among other reasons. Still, Delta’s stock is up 47 percent this year, the most of any U.S. carrier.
BEST BEHIND US: Boeing fell $3.30, or 2.4 percent, to $133.94 after brokerage RBC cut its outlook on the plane maker’s stock. Analysts at the bank say that after three years of record orders and no new planes in the pipeline, the good news for Boeing is "already out there."
TAX BOOST: H&R Block jumped $1.27 cents, or 4.1 percent, to $31.98, making it the second-biggest gainer in the S&P 500. Driving the stock higher was news that the company’s earnings beat Wall Street expectations. Fourth-quarter net income at the tax preparation company surged as more people used its services and its prepaid card.
TOUCH-SCREEN TECH: Synaptics jumped $17.59, or 27 percent, to $84.11 after the maker of touch-screen technology said it would buy smartphone and tablet chipmaker Renesas SP Drivers for $475 million. Because of the deal, Synaptics also raised its fourth-quarter revenue outlook.
BONDS AND COMMODITIES: As stocks fell, government bonds rallied. The yield on the 10-year Treasury note, which falls when Treasury prices rise, eased to 2.63 percent from 2.65 percent late Tuesday. The price of oil was little changed at $104.28 a barrel.