Dow Falls 60.09 (Market Update)

Nov 09 2010

Dow Falls 60.09 (Market Update)

Stocks fell Tuesday as investors became increasingly concerned about the potential impacts of the Federal Reserve’s stimulus plans announced last week.

The Dow Jones Industrial Average dropped 60.09 points, or 0.53%, to 11346.75. Bank of America was the measure’s weakest performer, off 33 cents, or 2.6%, to $12.27. Despite its plans to sell 25% more shares of BlackRock than it intended, the banking giant at this point remains short of the amount of capital it is supposed to have raised by a year-end deadline.

Chevron also weighed on the Dow with a drop of 1.24, or 1.5%, to 83.56 after the energy giant agreed to pay $3.2 billion in cash and assume $1.1 billion in debt to purchase Atlas Energy. Atlas shareholders will receive $38.25 a share in cash, a premium of 21% over its Monday closing price. Shares of Atlas, which isn’t a Dow component, surged 10.78, or 34%, to 42.50.

The Nasdaq Composite lost 17.07, or 0.66%, to 2562.98. The Standard & Poor’s 500-stock index shed 9.85, or 0.81%, to 1213.40.

The declines came on concerns about the potential impacts of the Fed’s plans to inject the economy with $600 billion in stimulus, dubbed by Wall Street as QE2. Global controversy has been mounting over the Fed’s moves ahead of a Group of 20 summit meeting that begins Wednesday night in Seoul.

“There’s a bit of concern about all the consequences both intended and unintended from launching QE2,” said Tim Evnin, partner and equity portfolio manager at Evercore Wealth Management.

Data showed inventories at U.S. wholesalers grew more than twice as much as expected in September. While the inventory build could be seen as a sign that companies are confident demand will hold up as the economy keeps recovering, some worried about whether that might leave companies with more inventory than they can sell.

“I would be very cautious about inventory build at this particular time when the end consumer’s going to be under inflationary pressures in food and energy,” said Paul Simon, chief investment officer at Tactical Allocation Group.

Among stocks in focus, Dean Foods fell 1.86, or 18%, to 8.50. The food-and-beverage company posted a 51% drop in third-quarter earnings, falling short of analysts’ estimates, as its dairy operations—the company’s biggest unit—struggled. Dean Foods also forecast lower-than-expected fourth-quarter earnings and said its finance chief is resigning.

Priceline jumped 32.07, or 8.3%, to 420.54. The online travel agency’s third-quarter profit excluding items topped the company’s August forecast, and it projected fourth-quarter earnings and revenue growth ahead of Wall Street’s estimates.

Brookdale Senior Living fell 91 cents, or 4.5%, to 19.15, after announcing the sale of 13 million shares of its common stock by affiliates of Fortress Investment Group at a price of $18.76 a share. The assisted-living facility company won’t receive any of the proceeds. Fortress shares edged up 3 cents, or 0.6%, to 5.05.

Convergys jumped 82 cents, or 6.9%, to 12.65. The provider of back-office services including technical support and marketing research swung to a third-quarter profit, with earnings excluding items topping analysts’ estimates.

Fossil climbed 3.88, or 6.1%, to 67.85. The company’s third-quarter profit surged 93% as the watch and fashion-accessories retailer’s sales jumped sharply and margins improved.

Hologic rose 45 cents, or 2.8%, to 16.73. The maker of diagnostic and monitoring gear swung to a fiscal fourth-quarter loss on write-downs, although revenue rose more than the company had expected.

Marsh & McLennan dropped 83 cents, or 3.2%, to 25.15. The company’s third-quarter profit dropped 24% as a tax gain boosted prior-year results while revenue rose at its insurance and consulting businesses. The company’s earnings per share just missed the Street forecast.

Sara Lee added 41 cents, or 2.8%, to 15.21. The namesake cheesecake and other packaged food maker announced plans to sell its North American fresh bakery business to Mexican bakery giant Grupo Bimbo for $959 million, ridding itself of a business that has been hurt by hefty promotions in grocery stores.

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