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There were no blaring headlines today surrounding why markets took a nosedive, but instead a host of ominous signs that economies around the globe continue slowing down. Let's take a look at how markets fared today and check in on some of the day's news.
Today's Change (Percent)
|Dow Jones Industrial Average (INDEX: ^DJI )||-64.33 (-0.49%)|
|S&P 500 (INDEX: ^GSPC )||-5.98 (-0.43%)|
|Nasdaq (INDEX: ^IXIC )||-6.32 (-0.21%)|
Source: S&P Capital IQ.
Those losses followed up a 1.02% drop in London's FTSE 100 index. Headlines out of Europe today focused on the continent's sky-high unemployment. The EU released figures earlier today showing the 17-nation eurozone had 11.2% unemployment in June. Of course, not every country is suffering equally, with Spain seeing the highest unemployment rate of 24.8%. However, what's also concerning is that the job situation in the eurozone is deteriorating across the board, with even Germany seeing a small 7,000-person rise in joblessness.
Then there's China, which has been struggling with continually decelerating growth rates. Statements from official news agencies in the country pointed to government accommodation of more growth policies. On the surface, that'd seem like a positive development. However, part of these efforts seem to be to boost loans to local governments. That's an area with high debt built up from the last financial crisis, and one that frequently engages in misallocating capital to unneeded projects.
Moving back to the United States, a tough earnings season keeps grinding on, with 32 S&P 500 components reporting earnings either before or after the bell. The biggest laggard among companies reporting was Coach (NYSE: COH ) , which saw an 18.6% drop today as growth in North American stores stalled. The miss wasn't particularly large; revenue came in at $1.16 billion versus estimates of $1.2 billion. However, Coach seemed to be the victim of the slowing growth that's taking its toll on the retail sector. Promotions -- i.e., sales -- from competitors caused hiccups in its Outlet stores, which Coach blames for its sales shortfall.
The key takeaway from Coach is that tough selling environments can prompt price battles, which is bad for industry bottom lines. This quarter, the S&P 500 is on pace for a slight decrease from earnings last year, which is never a welcome sign.
In happier news
Yet while Coach led the losers, there are bright spots among a generally dismal earnings crowd. Just look to Apple chip supplier Cirrus Logic (Nasdaq: CRUS ) , which soared 23% today on guidance for next quarter. The big reason for the jump: The company is ramping up chips for the next version of the iPhone. Even in uncertain markets like today, where Coach is seeing growth slow, people are still buying iPhones.
Take the long-term view
That's it for today's market recap. From day to day, there are points of optimism and recovery, and also the constant threat that trouble spots like Europe could push the world economy back into recession. Today, the noise around the negativity won out.
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