US stocks plunge, wiping out July’s gains

STEVE ROTHWELL, AP Business Writer

NEW YORK (AP) — U.S. stocks plunged Thursday, putting the market on track for its first monthly loss since January. Major indexes started lower and the losses accelerated as the day went on. The slide interrupted a prolonged advance in the market and put it on course for its first monthly loss since January. The Standard & Poor’s 500 index reached its latest record high just one week ago. It’s currently 2.7 percent below that level.

Investors responded to several weak earnings reports, escalating geopolitical instability and widespread views that stocks had become too expensive. They are also contemplating the likely end of the Federal Reserve’s stimulus program this year.

KEEPING SCORE: The Dow Jones industrial average was down 305 points, or 1.8 percent, to 16,574 as of 3:51 p.m. Eastern time. The Standard & Poor’s 500 index dropped 38 points, or 1.9 percent, to 1,932. The Nasdaq composite dropped 89 points, or 2 percent, to 4,373.

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OIL PRODUCTION WOES: Exxon Mobil fell $3.57, or 3.5 percent, to $99.70 after the energy company said that oil and gas production slipped 6 percent, disappointing analysts. Oil and gas production fell to 3.84 million barrels of oil and gas per day from 4.15 million barrels last year. The decline was driven by the expiration of rights to a field in Abu Dhabi and natural field declines.

BAD BOOKS: L-3 Communications plunged $17.58, or 14.7 percent, to $100.37 after the company reported that it was investigating accounting irregularities at is Aerospace Systems unit. The company said it expects to incur a charge of $84 million and cut its earnings forecast for the second half of the year.

BAD MEAT: Yum Brands slumped $3.84, or 5.3 percent, to $69.16 after the owner of the KFC and Pizza Hut fast-food chains said Thursday a food safety scandal in China that involved repacked meat has hurt sales and might be severe enough to cut into the company’s global profit. Yum said in a regulatory filing that it was too early to know when sales might rebound.

ARGENTINE STOCKS: Argentina’s stock market slumped 6.8 percent to 8,327. The collapse of talks with U.S. creditors Wednesday sent Argentina into its second debt default in 13 years and raised questions about what comes next for the South American nation’s staggering economy.

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THE QUOTES: The S&P 500 index closed at a record earlier in the month, extending a five-year bull run. The S&P 500 hasn’t had a sell off severe enough to qualify as a correction, Wall Street parlance for a fall of 10 percent or more from a peak, since October 2011.

The gains have also come despite rising political tensions between Russia and the West and an escalating war between Israel and the Palestinian Group Hamas. Argentina’s default can now be added to the list of worrying developments.

“It’s an accumulation of all these little things,” said Jerry Braakman, chief investment officer at First American Trust. “People feel that we due for, not a major correction, but some sell-off in the three to 10 percent range.”

ORGANIC ANGST: Whole Foods Market fell 96 cents, or 2.5 percent, to $38.15 after reporting quarterly sales that fell shy of Wall Street expectations. The upscale grocer also lowered its sales forecast for the year. That raised worries about the intensifying competition Whole Foods is facing. The company, based in Austin, Texas, has enjoyed growth as more Americans move to eat diets they feel are wholesome. More recently, however, it products have become more mainstream.

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ENERGY TRADING: The price of oil fell 2.1 percent to its lowest level since March on global economic concerns. Benchmark U.S. crude fell $2.10 to close at $98.17 a barrel on the New York Mercantile Exchange, its lowest level since March 17. Oil’s high for the year was $107.26, set on June 20; its low was $91.66, set on January 9. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 49 cents Thursday to close at $106.02 on the ICE Futures exchange in London. In other energy futures trading: Wholesale gasoline fell 1.9 cents to close at $2.797 a gallon, Natural gas rose 5.5 cents to close at $3.841 per 1,000 cubic feet and heating oil fell 0.7 cent to close at $2.890 a gallon.

BONDS: Prices for U.S. government bonds were little changed. The yield on the 10-year Treasury note held steady at 2.56 percent.

AP Business Writer Kay Johnson contributed from Mumbai, India.