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August 13, 2012

Stocks fall as economic malaise spreads to Japan

From The Associated Press

NEW YORK — U.S. stocks fell Monday as evidence piled up that the global economic slowdown is dragging on Asia.

Japan’s economy grew in the second quarter at a 1.4 percent annual rate, far slower than analysts had expected. Last week, China released dismal figures on retail sales and exports in July. Traders had hoped Beijing would roll out stimulus measures over the weekend. That did not happen.

Slower growth in Asia is worrisome because the region’s economic strength has offset weakness in the U.S. and Europe during the past several years. Exports from Asia are plunging, a sign that Europe’s economic woes are stifling consumer demand for products made there.

The Dow Jones industrial average fell 19 points to 13,189 in the first half-hour of trading. The Standard & Poor’s 500 index fell two to 1,404. The Nasdaq composite also fell two to 3,019.

Most Asian markets closed lower. European markets were mixed.

While Chinese and U.S. monetary authorities are thought to be considering how to ease monetary policy further, the European Central Bank is expected to take a more active role firefighting Europe’s debt crisis in order to reduce the borrowing rates of Spain and Italy.

Central banks have been hesitant so far to get involved with the economy on what may be the cusp of a rebound. They are mindful, however, of the effect that an achingly slow recovery has on businesses and consumers.

China revealed Friday that export growth in July plunged to just 1 percent from 11.3 percent as recently as the prior month. That was well below forecasts of about 5 percent.

The lack of growth globally is pushing U.S. corporations to cut costs to offset the slow growth, or decline, in net income.

Among stocks making big moves Monday:

— Google rose after announcing that it would cut 20 percent of the staff at Motorola Mobility, the struggling mobile phone maker it acquired in May. Motorola hasn’t had a hit product since it introduced the Razr in 2005. Google’s stock rose $8.57 to $650.57.

— Sears Holdings Corp. shot up $2.17, or 4.2 percent, to $53.59. The department store chain announced plans to spin off its Hometown and Outlet stores and some hardware stores into a separate, public company.

— Pfizer Inc. said it will sell stock in Zoetis, its animal health business, to pay off debt. The stock fell 20 cents, or 0.8 percent, to $23.75.

 

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