Market Report

Surging stocks take a breather

This file photo made April 22, 2010 shows a Wall Street sign in front of the New York Stock Exchange. U.S. stock futures slipped Wednesday, June 11, 2014, after the World Bank downgraded its forecast for the global economy this year, citing a bitter American winter and the political crisis in Ukraine.
This file photo made April 22, 2010 shows a Wall Street sign in front of the New York Stock Exchange. U.S. stock futures slipped Wednesday, June 11, 2014, after the World Bank downgraded its forecast for the global economy this year, citing a bitter American winter and the political crisis in Ukraine.

NEW YORK -- The stock market fell back from record levels Wednesday because of a weaker forecast for global growth and concerns about airline profits.

The Standard & Poor's 500 index fell 6.90 points, or 0.4 percent, to 1,943.89. The index had closed at a record of 1,951.27 on Monday. The Dow Jones industrial average dropped 102.04 points, or 0.6 percent, to 16,843.88. The Nasdaq composite slipped 6.07 points, or 0.1 percent, to 4,331.93.

Stocks opened lower after the World Bank predicted weaker global growth this year, citing a tough winter in America and the political crisis in Ukraine. The bank said late Tuesday that it expects the world economy to grow 2.8 percent this year instead of the 3.2 percent it predicted in January.

"That negative movement is the World Bank adding pressure with concerns about growth," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York. Pavlik helps oversee $4.5 billion. "People are tentative with a market that's trading near all-time highs with low growth prospects."

The report was a reality check for investors who had pushed major stock indexes to all-time highs this week as optimism held that the U.S. economy was strengthening. Stronger growth should translate into higher revenue and better profits for U.S. companies.

Stocks "were going up so much in the last few days that they were due for a little breather," said Brad Sorensen, director of market and sector research at Charles Schwab.

On Wednesday, airline stocks were among the big losers after Lufthansa warned of smaller profits caused by weaker passenger demand. Lufthansa AG cut its forecast for 2014 and 2015 operating profit because of weaker demand and strikes, among other reasons. Delta dropped $1.21, or 3 percent, to $40.71, making it the second-biggest loser among S&P 500 stocks.

Still, Delta's stock is up 48 percent this year, the most of any U.S. carrier.

United Continental fell $2.50, or 5 percent, to $45.26 and American Airlines slid $1.37, or 3 percent, to $42.29.

Boeing was another big decliner.

The plane-maker's stock fell $3.15, or 2.3 percent, to $134.10 after analysts at RBC said that after three years of record orders and with no new planes in the pipeline, the good news for Boeing is "already out there."

Some analysts said Boeing's share price drop was the result of U.S. House Majority Leader Eric Cantor's Tuesday primary defeat because it threatens congressional reauthorization of low-cost lending that benefits the company.

Cantor lost to a Tea Party-backed candidate in Tuesday's Virginia primary, fueling concern about further gridlock in Washington. Cantor, a seven-term House veteran, was an ally for Wall Street on issues ranging from the 2008 Troubled Asset Relief Program to defending the Export-Import Bank.

"There were very few folks who expected this," said Michael Block, chief strategist at New York-based Rhino Trading Partners LLC. "I'm not concerned about the debt ceiling but some are and I will say Cantor was good at finding compromises relative to the rest of the party."

Information for this article was contributed by Oliver Renick of Bloomberg News.

Business on 06/12/2014

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