Weak oil, soft data weigh on U.S. stocks

By Tanya Agrawal

(Reuters) - U.S. stocks added to their losses on Monday as oil prices touched a six-month low and data showed the U.S. economy lost some momentum at the end of the second quarter.

Energy stocks were the biggest losers among the main S&P sectors, recording their worst three-day decline in seven months. Exxon Mobil and Chevron , which also reported poor results on Friday, led the losses.

Oil prices were knocked by fresh evidence of growing oversupply and data highlighting slowing demand in China. Crude prices are now on course for their weakest third-quarter performance since the financial crisis in 2008. [O/R]

 

In U.S. data, consumer spending recorded its smallest gain in four months, while the pace of growth in the manufacturing sector slowed in July. On Friday, wage data showed that labour costs in the second quarter rose the least in 33 years.

The spate of disappointing economic reports bolsters the argument that the U.S. Federal Reserve might wait until December to raise rates. Higher rates increase borrowing costs, leading to lower profits for corporations.

Investors have been scouring data - all eyes are now on the monthly jobs report that will be released on Friday - for clues regarding the timing of the first rate increase in nearly a decade. The U.S. Federal Reserve has said it will hike rates only when it sees a sustained recovery in the economy.

"The market is taking score of every single data print between now and September," said George Goncalves, head of U.S. rates strategy at Nomura Securities International in New York.

"If the balance continues to shift more towards weaker data than stronger data, it may make September a coin flip."

At 13:16 p.m. ET (1716 GMT), the Dow Jones industrial average <.DJI> was down 184.66 points, or 1.04 percent, at 17,505.2, the S&P 500 <.SPX> was down 15.67 points, or 0.74 percent, at 2,088.17 and the Nasdaq Composite <.IXIC> was down 42.27 points, or 0.82 percent, at 5,086.01.

Apple's 2.7 percent fall weighed the most on the Nasdaq and the S&P 500. Shares of the world's largest company by market value slipped below their 200-day daily moving average, a key technical level, for the first time in nearly two years.

Nine of the 10 major S&P sectors were lower, with the utilities index <.SPLRCU> being the lone gainer.

Investors are awaiting another batch of earnings this week - AIG , Allstate and General Growth Properties report after the market closes on Monday.

With more than half of the S&P 500 companies having reported their second-quarter results, analysts expect overall earnings to edge up 0.9 percent and revenue to decline 3.3 percent, according to Thomson Reuters data.

Tyson Foods shares fell 9.5 percent to $40.14 after the biggest U.S. meat processor cut its profit forecast for the year, citing export market disruptions in its beef business and high cattle costs.

Peabody Energy fell 9.6 percent to $1.1 as President Barack Obama prepares to unveil the final version of his plan to tackle greenhouse gases from coal-fired power plants.

Loews Corp fell 3.3 percent to $36.85 after the hotel, energy and financial services conglomerate reported a 44 percent drop in quarterly operating profit.

Declining issues outnumbered advancers on the NYSE by 2,042 to 945. On the Nasdaq, 1,955 issues fell and 799 advanced.

The S&P 500 index showed 22 new 52-week highs and 22 new lows, while the Nasdaq recorded 69 new highs and 113 new lows.

(Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)