Investors sold risk-sensitive sectors such as energy and tech, while they poured money into more defensive areas like utilities and consumer staples. The S&P technology sector declined 0.8 per cent and the energy sector fell 0.9 per cent, while S&P utilities ended up 0.2 per cent.
Violent protests in Madrid against expected austerity measures and growing talk of secession in the wealthy Catalonia region increased pressure on Spanish Prime Minister Mariano Rajoy as he moves closer to asking Eurozone policymakers for rescue money.
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.
“When it gets down to it, there is real disagreement between the people in the streets and the policy makers” in Europe, said Tim Ghriskey, chief investment officer of Solaris Group.
“I think it’s certainly causing some concerns” for investors, he said, adding, “The market’s probably looking for an excuse to have a correction.”
The S&P 500 is up 5.2 per cent so far for the third quarter and 1.9 per cent for September, historically a weak month for equities. Gains were largely tied to actions taken by the US Federal Reserve and European Central Bank to prop up their economies.
For the day, the Dow Jones industrial average was down 44.04 points, or 0.33 per cent, at 13,413.51. The Standard & Poor’s 500 Index was down 8.27 points, or 0.57 per cent, at 1,433.32. The Nasdaq Composite Index was down 24.03 points, or 0.77 per cent, at 3,093.70.
Also weighing on tech shares yesterday, Jabil Circuit tumbled 9.9 per cent to $18.90 after the technology company reported fourth-quarter earnings that missed expectations and forecast weak first-quarter results.
Other recent earnings warnings from companies including FedEx, the world’s second biggest package delivery company, and Caterpillar, the biggest maker of earth-moving equipment, have sparked concerns about global growth.
Outlooks for the third quarter are at the most negative since 2001, according to Thomson Reuters data. The negative-to-positive ratio for the upcoming earnings period stands at 4.3 to 1. On the plus side for the day, American Greetings, jumped 17.3 percent to $16.82 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 $580m.