* Rajoy says Spain committed to reforms, pleads for
sacrifice
* Investors worry sluggish economy threaten company profits
* Jabil Circuit latest company to cut outlook
* Indexes off: Dow 0.02 pct, S&P; 0.2 pct, Nasdaq 0.5 pct
By Chuck Mikolajczak
NEW YORK, Sept 26 (Reuters) – U.S. stocks fell on Wednesday
as renewed upheaval in the euro zone over financial bailouts led
investors to book profits from recent gains near the close of a
strong third quarter.
Violent protests in Madrid against expected austerity
measures and growing talk of secession in Catalonia increased
pressure on Spanish Prime Minister Mariano Rajoy as he moves
closer to asking euro zone policymakers for rescue money.
Rajoy, speaking to the Americas Society in New York, said
measures in Spain are necessary to strengthen Europe and the
government was committed to fiscal discipline and structural
reforms with sacrifice that must be shared across Spanish
society.
Meanwhile, Greece faced its biggest anti-austerity protest
in more than a year as international lenders admitted to
difficulty in working out how to solve Athens’ debt crisis.
“There is still a real risk that Europe has to make some
decisions that could hold the market together … over the next
few weeks as it relates to Greece and certainly Spain,” said T.
Doug Dale, chief investment officer for Security Ballew in
Jackson, Mississippi.
“There are still enough unknowns out there that it doesn’t
take a whole lot to get the S&P; back off.”
The S&P; 500 is up more than 5 percent for the third quarter
and nearly 2 percent for September, historically a weak month
for equities, largely due to actions taken by the U.S. Federal
Reserve and European Central Bank to prop up their economies.
The Dow Jones industrial average shed 2.07 points, or
0.02 percent, to 13,455.48. The Standard & Poor’s 500 Index
dropped 2.89 points, or 0.20 percent, to 1,438.70. The
Nasdaq Composite Index lost 16.31 points, or 0.52
percent, to 3,101.42.
Since the Fed’s most recent stimulus plan on Sept. 13, the
benchmark index has fallen 1.4 percent as earnings warnings from
companies, including FedEx Corp and Caterpillar Inc
, have sparked concerns about global growth.
But analysts noted Wednesday’s declines were limited and
credited similar policies by central banks, an improvement in
the U.S. housing market and stocks that were cheap compared to
historical levels.
“Last year, when you started to see negative news out of
Europe, the fear was contagion, the fear was a Lehman-type
event. We’ve removed that tail risk from the marketplace,” said
Art Hogan, managing director at Lazard Capital Markets in New
York.
“Having removed … the Lehman-type event risk out of Europe
makes days like today a little less volatile.”
A government report that prices of new U.S. single-family
home sales vaulted to their highest level in more than five
years in August also helped to reassure jittery investors.
Jabil Circuit tumbled 9.5 percent to $18.98 after
the technology company reported fourth-quarter earnings that
missed expectations and forecast weak first-quarter results.
The session’s best performing sectors were defensive plays
such as utilities, telecoms and consumer staples
.
Longer term, however, the equity outlook appeared more
positive. While the S&P; 500 wasn’t expected to move much from
its current level through the end of the year, according to a
Reuters poll of analysts, it should advance in the first half of
2013, largely on central bank actions.
American Greetings Corp jumped 17.2 percent to $16.81
after the company said it received an offer to go private from a
group led by its chief executive, valuing the greeting card
company at about $580 million.
New Yahoo Inc Chief Executive Marissa Mayer laid
out goals for the Internet company in her first companywide
address Tuesday and chose a new chief financial officer. Shares
edged up 0.1 percent to $15.70.
