Stocks Fall as Economic Malaise Spreads to Japan

Stocks Fall as Economic Malaise Spreads to Japan

By DANIEL WAGNER
AP Business Writer
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, slower than many 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.

The Dow Jones industrial average fell 61 points to 13,146 as of 10:45 a.m. EDT. The Standard & Poor’s 500 index fell six to 1,400. The Nasdaq composite fell 12 to 3,008.

The S&P 500 had risen for six straight days before Monday, its longest rally since December 2010. The S&P 500 and Dow have also risen every week for the past five weeks. The S&P 500 wrapped up a five-week climb in mid-March. The Dow hasn’t done so since last October.

Slower growth in Asia worries investors 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.

Yet stocks, bonds and most other investments are all up for the year, Cote noted. He said the markets have been “pricing in Armageddon when clearly things are much better than that.” Cote expects stocks to continue their upward trend as fears about the global economy dissipate.

Asian markets mostly closed lower. Most European indexes were down, but stocks edged higher in Spain and in Italy. Traders speculated that the European Central Bank will take a more active role in fighting the region’s debt crisis by reducing borrowing costs for those countries.

Monetary authorities in the U.S. and China also are believed to be weighing plans to ease monetary policy. 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.

Traders sought out safer investments such as U.S. Treasurys. The price of the 10-year Treasury note rose, pushing its yield down to 1.64 percent from 1.66 percent late Friday.

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.

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Daniel Wagner can be reached at http://www.twitter.com/wagnerreports .

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