NEW YORK (Reuters) – Wall Street stocks fell on Tuesday, hit by signs the euro zone crisis is worsening and evidence that Europe’s slowdown is hurting U.S. companies, including bellwether UPS.
The decline was the third straight for the S&P 500 index, which tested its 50-day moving average, a technical support level which could trigger more selling if convincingly broken.
Stocks got a lift late in the session after the Wall Street Journal said Federal Reserve officials were moving closer to taking new steps to spur activity and hiring. Fed officials recently have spelled out what measures they might take, including Chairman Ben Bernanke in a speech last week.
United Parcel Service (UPS.N), seen by many as a proxy for economic activity, fell 4.6 percent to $74.34 after reporting quarterly results that missed forecasts and cut its 2012 outlook, citing uncertain global economic conditions. UPS helped pull the Dow Jones Transportation average down 1.2 percent.
“We are going through an adjustment period where there has been a lot of talk about Europe facing a recession in 2012. Now we are actually seeing it in the earnings and the market is reacting to that,” said Gail Dudack, chief investment strategist at Dudack Research Group in New York.
The struggles of the U.S. and euro zone economies intensified in July, surveys showed on Tuesday. Europe’s private sector looked set for a prolonged slump as the surveys showed the downturn that began in the euro zone’s small economies has since become entrenched in Germany and France.
Concerns about the euro zone grew after Spain was forced to pay the second highest yield on short-term debt since the launch of the euro and European Union officials said Greece had little hope of meeting the terms of its bailout.
AT&T Inc (T.N) lost 2.1 percent to $34.63 after the company reduced its outlook for business services this year. The S&P telecom index dropped 1.8 percent.
Whirlpool Corp (WHR.N) slumped 7.5 percent to $62.25 after the world’s largest appliance maker missed Wall Street’s expectations for quarterly earnings and sales, hurt by weak demand in Europe and a stronger dollar.
The Dow Jones industrial average was down 104.14 points, or 0.82 percent, at 12,617.32. The Standard & Poor’s 500 Index was down 12.21 points, or 0.90 percent, at 1,338.31. The Nasdaq Composite Index was down 27.16 points, or 0.94 percent, at 2,862.99.
The Fed says it is still considering a third bout of quantitative easing, or QE3, and some analysts expect recent weakness in the U.S. economy could prompt policymakers to launch such a program as early as September.
“Given the events going on around the world, I think the odds are increasing the Fed will take action at one of the next two meetings,” said Michael Sheldon, chief market strategist, RDM Financial, Westport, Connecticut.
Of the 145 companies in the S&P 500 that have reported earnings for the quarter, 66.9 percent have beaten analysts’ expectations, Thomson Reuters data showed. Over the past four quarters, 68 percent have beaten estimates.
Cisco Systems Inc (CSCO.O) fell 5.9 percent to $15.12 after VMWare Inc (VMW.N) said it would acquire privately held Nicira Inc, a move seen as a threat to Cisco’s core switching and routing business.
(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)