new York 09 26, 2012, 19:50 IST
The broad S&P 500 index ticked lower on Wednesday and was on track for a fifth straight day of losses in a sign investors remain concerned about the global growth outlook as a strong quarter comes to a close.
The S&P is down 1.4 percent since last Wednesday. Tuesday's decline, which came as Caterpillar Inc cut its profit outlook, was the index's worst one-day drop since June.
Markets have been seeking new catalysts to keep pushing shares higher since the U.S. Federal Reserve and European Central Bank announced stimulus measures this month. The S&P is up 5.7 percent so far this quarter, with central banks' monetary stimulus responsible for much of the gain.
Slowing global growth may make continued improvement in company profits hard to come by. In addition to Caterpillar, FedEx Corp and Norfolk Southern also cut their forecasts recently.
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"Buyers have reached a point of exhaustion after FedEx and Caterpillar and the like, all of whom pointed to economic weakness," said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania. "People had been buying on the idea that the Fed would prop everything up, but if they can't, there's real potential for panic selling."
Technology company Jabil Circuit late Tuesday reported fourth-quarter earnings that missed expectations and forecast weak first-quarter results, sending shares down 7.2 percent to $19.45.
The Dow Jones industrial average was flat at 13,448. The Standard & Poor's 500 Index was down 5 points, or 0.3 percent, at 1,437. The Nasdaq Composite Index was down 14 points, or 0.5 percent, at 3,103.
Longer term, the equity outlook is positive. While the S&P 500 isn't expected to move much from its current level through year-end, according to a Reuters poll of analysts, it is seen advancing in the first half of 2013, largely on central bank actions.
The Dow was supported on Wednesday by Wal-Mart Stores , which rose 0.7 percent to $74.75. The discount retailer tends to outperform in periods of weak growth as consumers seek out cheaper merchandise.
New U.S. single-family home sales unexpectedly fell in August but held near two-year highs and prices vaulted to their highest level in more than five years, the government said, adding to signs of a broadening housing market recovery.
Weakness appeared in overseas markets as well. European shares slumped 1.4 percent. Growing opposition to measures aimed at resolving the euro zone's debt crisis unnerved investors already worried about weak global economic growth.
The S&P 500 is up 2.5 percent so far in September, historically a difficult month for the market, and recently hit the highest level in nearly five years.
"Lately, we've been at these levels because anytime there was a selloff like on Tuesday, we would buy on the dip," Dailey said. "If we continue to fall today, that would represent a very significant change in character for how we're responding to bad news."
The quarter's best performing stocks could be helped on Friday, the last session of the third quarter, as money managers add outperforming shares to dress up their portfolios. MetroPCS and Sprint Nextel are the top two S&P 500 gainers for the quarter to date.
Yahoo Inc new 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 rose 0.6 percent to $15.77.
(Editing by Kenneth Barry)