Indexes down after FedEx gives a glum outlook

Stocks fall slightly as investors focus on economic woes; FedEx sees global economy worsening

Associated Press
Stocks mixed after FedEx gives a glum outlook

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FILE - In a Sept. 12, 2012 file photo, John O'Hara, center, of Barclays directs trading on the floor of the New York Stock Exchange, in New York. Stock futures are following global markets into negative territory for a second day Tuesday, Sept. 18, 2012 with investors again sizing up the myriad of economic challenges ahead. (AP Photo/Henny Ray Abrams, File)

Glum economic news pushed stocks down slightly on Tuesday after FedEx said it's seeing recession-like conditions.

The declines were widespread, but mild. The Dow Jones industrial average fell 10 points to 13,544 shortly after noon Eastern. The broader Standard & Poor's 500 index fell four points to 1,457. The Nasdaq was down seven points at 3,172.

Markets in Europe fell, and so did oil prices.

FedEx said it's seeing a worldwide economy that is stalled. Investors pay close attention to its forecasts because its package delivery business spans the globe and offers a good window into how the economy is doing.

FedEx reduced its fiscal-year profit forecast sharply because its customers were using its express air delivery service less in favor of slower and cheaper ground service. FedEx's stock fell $1.91, or 2.1 percent, to $87.37.

Apple climbed above $700 for the first time, but then fell back to $699, down 78 cents. Apple shares have risen more than 19 percent in the past three months. The recent gain has been driven by strong sales of the company's iPhone and related gadgets.

Among the 10 industry groups in the S&P 500, only consumer staples, telecommunications and health care stocks rose. Energy stocks were down 0.9 percent.

Stocks have been on a strong run, with the S&P 500 up 14 percent since June 1.

"The market is at high levels, certainly due for a pullback, and I suspect we'll probably see one," said Peter Cardillo, chief market economist at Rockwell Global Capital.

Advanced Micro Devices plunged 31 cents to $3.69. The world's second-largest maker of microprocessors for personal computers announced unexpectedly late Monday that its chief financial officer was leaving.

Clearwire Corp. fell 16 cents, or 10.4 percent, to $1.38 after Time Warner Cable Inc. said it would sell its 7.8 percent stake in the wireless infrastructure company.

Most retail stocks fell. Target fell 41 cents to $64 and Bed Bath & Beyond gave up $1.73, or 2.5 percent, to $69.04.

Markets had rallied sharply last week after the Federal Reserve announced aggressive measures intended to kick-start the economy. This week, investors have been more focused on the weak growth that caused the Fed to act in the first place.

The Fed's announcement was for open-ended asset purchases with no set ending time, noted Charlie Smith, chief investment officer for Fort Pitt Capital Group in Pittsburgh.

"The feeling on the Street is, 'OK, what can they do next?' and by definition there's nothing more they can do than what they announced," he said. That means investors may feel that they've gotten all of the gains they're going to get after the Fed's announcement, he said.

Also on Tuesday, the Commerce Department reported that the current account deficit dropped 12.1 percent in the second quarter. That's down from a record high in the January-through-March quarter. The deficit shrank because of an increase in American exports and cheaper oil. But economists are predicting it will grow again because of the global slowdown.

Oil prices fell 63 cents to $95.99 per barrel on the New York Mercantile Exchange. Oil had hit $100 per barrel in recent days but dropped $4 per barrel in late trading Monday. The drop looked like a trading glitch at first, but with prices continuing lower on Tuesday it began to look more like a legitimate sell-off as concerns about the lethargic economy persisted.

Stocks fell in Europe, too. The CAC-40 in France was down 1 percent, the FTSE-100 in Britain fell 0.4 percent, and the DAX in Germany was down 0.8 percent.

The yield on the 10-year U.S. Treasury note fell to 1.79 percent from 1.84 percent late Monday.

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