U.S. stocks fell, sending the Dow Jones Industrial Average to a three-month low, as FedEx Corp’s results and Fifth Third Bancorp’s dividend cut reinforced concern bank losses and record oil will prolong the slump in profits.
Memphis-based FedEx slid to the lowest since March as rising fuel costs helped send the second-biggest U.S. package-shipment company to its first quarterly loss in 11 years.
Fifth Third, Ohio’s second-largest bank, tumbled the most in at least 28 years and led the S&P 500 Regional Banks Index to its biggest drop ever. (See related story.)
The S&P 500 dropped 13.12 points, or 1 percent, to 1,337.81. The Dow Jones Industrial Average decreased 131.24, or 1.1 percent, to 12,029.06, its lowest since March 17. The Nasdaq Composite Index lost 28.02, or 1.1 percent, to 2,429.71. Three stocks fell for each that rose on the New York Stock Exchange.
“It’s just going to be a tough environment for equities for a while,” David Joy, chief market strategist at Riversource Investments LLC in Minneapolis, which manages $160 billion, told Bloomberg Television. “The environment is not conducive to growing earnings.”
Financial shares began their retreat before the official open of exchanges after investor John Paulson, who earned the most of any hedge fund manager last year on bets that subprime debt would fall, told a conference in Monaco that banks are only a third of the way through credit-related writedowns.