MW: U.S. stocks drop after glum euro-zone, Japan data
By Polya Lesova, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks dropped on Thursday after data showed contractions in the Japanese and euro-zone economies in the fourth quarter, raising concerns about global growth.
Overseas economic data were largely downbeat Thursday, though there was some positive news from the U.S.
Gross domestic product in the 17-nation region contracted by 0.6% compared with the third quarter and fell 0.9% from the fourth quarter of 2011, the European Union statistics agency, Eurostat, reported Thursday. And in Japan, real GDP shrank at an annualized rate of 0.4% in the October-December quarter from the preceding three months, with the result countering expectations for growth in GDP.
Tempering some of the gloom, the Labor Department reported that U.S. jobless claims dropped by 27,000 to 341,000 in the week ended Feb. 9. Economists surveyed by MarketWatch expected a much smaller drop.
The Dow Jones Industrial Average DJIA +0.0077% slipped 20 points, or 0.1%, to 13,963, led lower by Cisco Systems Inc. CSCO -1.51% whose shares dropped 2.1%. Cisco late Wednesday reported a small gain in earnings for its fiscal second quarter. See: Cisco earnings beat targets on small sales gain.
The S&P 500 index SPX +0.02% declined 3.49 points, or 0.2%, to 1,516.83, with telecommunications the biggest decliner and consumer staples the only gainer among the benchmark’s 10 major industries.
CenturyLink Inc. was the largest decliner in the S&P 500. Its shares CTL -20.13% slumped nearly 19% after the landline provider slashed its dividend and authorized a $2 billion stock buyback plan. The moves triggered negative actions from rating agencies. See: CenturyLink cuts dividend.
In the consumer-staples sector, Constellation Brands Inc. shares surged nearly 36%. Beer giant Anheuser-Busch InBev NV BUD +5.70% BE:ABI +6.93% and Constellation said they’ve agreed on new terms for AB InBev’s full divestiture of the U.S. assets of Mexico’s Grupo Modelo SAB de CV.
Deal news stole the spotlight. H.J. Heinz Co. HNZ +19.88% , the food company known for its ketchup, agreed to be acquired by Warren Buffett’s Berkshire Hathaway BRK.A +1.14% and 3G Capital in a deal valued at $28 billion, including debt. Heinz shareholders will receive $72.50 per share in cash, which is a 20% premium to Heinz’s closing price of $60.48 on Wednesday. Shares of Heinz rallied 20%.
In the airline sector, the parent of American Airlines, AMR Corp. AAMRQ +53.08% and US Airways Group Inc. LCC -3.92% announced formal plans to merge and create the world’s biggest air carrier. US Airways shares declined 2.5%. See: AMR Corp., US Airways to merge, creating world’s largest airline.
Nick Beecroft, senior market analyst at Saxo Capital Markets, said weak European growth was contributing to weaker sentiment and the market was also a little unnerved by “brewing discontent about currency wars.”
The Wall Street Journal reported that George Soros and other hedge fund-managers are making huge profits by betting on a weaker yen. See: Soros, other hedge funds score billions betting on falling yen.
The dollar index DXY +0.46% , which tracks the performance of the greenback against a basket of other major currencies, rose 0.5% to 80.496. The euro EURUSD -0.8003% dropped 0.8% to $1.3342.
Treasurys rose, with the yield on the 10-year note 10_YEAR -0.15% down 3 basis points to 2.027%.
Polya Lesova is MarketWatch's New York deputy bureau chief. Follow her on Twitter @PolyaLesova.
