US stocks: Growth concerns limit markets

NEW YORK - US stocks fell for a fourth straight session on Wednesday, tumbling in the last hour of trading, as worries about slowing economic growth, higher oil prices and a stumbling housing market drove selling.

The three major US stock indexes started the day on a positive trend as network equipment maker Cisco Systems Inc.'s stronger-than-expected profit fueled a rebound in technology shares.

By mid-afternoon, though, stocks stumbled as economic growth concerns resurfaced and crude oil prices topped US$77 a barrel. The Nasdaq, which at one point was up nearly 2 per cent, held its gains for most of the day before slipping marginally into negative territory in the session's final minutes.

Shares of companies sensitive to shifts in economic cycles, such as heavy equipment maker Caterpillar Inc. and industrial conglomerate United Technologies Corp., led the declines. The shares of American International Group Inc. , the world's largest insurer, dropped 2 per cent and dragged on both the Dow and the S&P 500. AIG's earnings were set for release after the bell.

"There's just too many things facing investors right now, Besides the Fed, it's the economy, where it's going and what's happening with real estate," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.

On Tuesday, the Federal Reserve paused after raising interest rates for more than two years.

"People also just didn't believe in any rally off the Fed's decision to pause from raising interest rates yesterday. Oil continuing to be in the mid-US$70s also just doesn't bode well for a strong market."

The Dow Jones industrial average slid 97.41 points, or 0.87 per cent, to end at 11,076.18. The Standard & Poor's 500 Index declined 5.53 points, or 0.43 per cent, to finish at 1,265.95. The Nasdaq Composite Index inched down just 0.57 of a point, or 0.03 per cent, to close at 2,060.28.

AIG shares dropped 2 per cent, or US$1.19, to close at US$58.49 on the New York Stock Exchange.

After the closing bell, AIG shares rose 1.6 per cent to US$59.43 on the Inet electronic brokerage network after the insurer reported quarterly earnings that beat Wall Street's expectations.

During the regular session, Cisco's stock jumped 14.4 per cent, its biggest one-day percentage gain in more than four years. The stock ended up US$2.49 at US$19.78 on the Nasdaq.

Caterpillar shares dropped 4.3 per cent, or US$3.08, to US$68.52, while United Technologies shares fell 2.5 per cent, or US$1.57, to US$60.31, both on the NYSE. They were the Dow's two biggest decliners, followed by AIG. Caterpillar was the top drag on the Dow, followed by AIG.

Shares of home builders also took a hit, pushing the Dow Jones US home construction index down 4.48 per cent in its biggest one-day percentage slide in three months after luxury home builder Toll Brothers Inc. posted a decline in new orders and warned about the outlook.

Shares of Toll Brothers dropped 6.4 per cent, or US$1.70, to US$24.88 on the NYSE. Worries about housing, a key pillar of consumer spending, also weighed on shares of home improvement chain and Dow component Home Depot Inc., whose stock dropped 2.7 per cent, or 93 cents, to US$33.40.

US crude oil futures rose after the government reported drawdowns in crude oil, petrol and distillate supplies and amid a production outage in BP Plc's Prudhoe Bay field in Alaska, the largest in the United States.

Crude for September delivery rose 4 cents to settle at US$76.35 a barrel on the New York Mercantile Exchange. The Nymex September crude contract retreated from its session high of US$77.40 as investors took profits.

Trading was active on the NYSE, where about 1.71 billion shares changed hands, exceeding last year's daily average of 1.61 billion. On the Nasdaq, about 2.13 billion shares traded, exceeding last year's daily average of about 1.80 billion.

Decliners outnumbered advancers on the NYSE by a ratio of about 7 to 5, while on Nasdaq, about eight stocks fell for every five that rose.

- REUTERS