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Dow falls more than 100pts for third day

Stocks on Wall Street posted their third straight triple-digit point decline after a series of poor corporate-earnings reports and weak manufacturing data.

In today’s results, AT&T, UPS, DuPont and Texas Instruments all had earnings that exceeded expectations but revenues fell short, indicating a sluggish economy.

The Richmond Federal Reserve Bank showed a sharp contraction in Central-Atlantic manufacturing

The Dow Jones Industrial Average stumbled 1o4.14 points, or 0.9%, to 12,617.32 at the close (8am NZ time).

The S&P 500 index fell 0.9% to 1338.31 and the Nasdaq Composite also dropped 0.9% to 2862.99.

Other markets: Europe down, Asia steady
European stocks ended a volatile trading session in the red after Moody's cut its outlook on Germany, while investors continued to sell Spanish stocks and bonds.

The yield on 10-year Spanish government bonds added a further 12 basis points to 7.57%, a new euro-era high, Its sharemarket benchmark, the IBEX 35, slumped 3.6% to 5956.30, the lowest level since the beginning of April.

The Stoxx Europe 600 index dropped 0.5% to close at 250.57, marking a third day of losses.

The German DAX 30 index lost 0.5% to 6390.41, the French CAC 40 index fell 0.9% to 3074.68 and London's FTSE 100 index lost 0.6% to 5499.23.

Asian stocks ended little changed as a pickup in Chinese manufacturing helped offset continued concerns over Europe.
The preliminary HSBC China Manufacturing Purchasing Managers' Index came out at 49.5 in July, compared with a final reading of 48.2 in June, but was significantly higher than in the previous month.

The Australian S&P ASX 200, which is sensitive to Chinese economic data, pared its early losses to finish up 0.1% at 4133.20.

Korea's Kospi finished 0.3% higher at 1793.93 and the Shanghai Composite was up 0.2% at 2146.59.

Japan's Nikkei Average dropped 0.2% at 8488.09 to finish at a six-week low, while Hong Kong’s Hang Seng dropped 0.8% to 18,903.20 in an abbreviated session after a typhoon forced cancellation of the morning trades.

Commodities: Oil up, gold steady
Light, sweet crude oil for September delivery settled 36USc higher, at $US88.50 a barrel in New York.

September North Sea Brent crude oil settled up 16USc at $US103.42 a barrel. The contract fell $US3.57 a barrel on Monday, its biggest decline since December 14.

Gold futures were flat at $US1577 an ounce.

Currencies: Euro at two-year low
The euro fell to a fresh two-year low against the US dollar after business activity data flagged the growing risk of recession in the eurozone.

The euro was at $US1.2061 down from $US1.2117 late on Monday.

The dollar was at ¥78.16 compared with ¥78.39, while the euro traded at ¥94.284, down from ¥94.98.

The pound bought $US1.5512, barely up from $US1.5507, while the dollar fetched 0.9955 Swiss franc, up from 0.9911 franc.

More by Nevil Gibson

Comments and questions
6

The only reliable investment is a rental propery in Auckland.
A far better return than shares or bonds and no volatility.
Very hard to loose money at the moment with houses going up on average by 9% and this carries very attractive tax treatment..
You would be very lucky to achieve this return on shares in NZ or overseas.

Please be so good as to tell us where in Aus property has gone up by 9% in the last year? Last time I looked prices had fallen for the past 18 months or so.

The good news is that these continued share price falls (which will get worse as the world slips in recession) will scupper the flotation of Mighty Power.

Yes, I like to get my investment advice from anonymous people on the internet.

Especially from anonymous people who can't spell basic words.

Can you point to a property that has outperformed my investment in Diligent on the NZX? I bought at $1.35 in early October 2011. DIL.NZ is now $4.02, meaning I've had a 300% return in 10 months, or around 360% annualized.

And luck has little to do with this - reading balance sheets and analyzing a company's future prospects and its standing in the market it operates in is a skill, not some lottery outcome.

Run those % returns past me again.

If indeed Pablo did buy his DIL for 135c as indicated, his gain to date is 196%, or 235% annualised. But this is investing in the rear-view mirror, and he is using an extreme example.

Major whoopsie - not enough coffee this morning! I included the principle in the return.

However, I am not sure it's accurate to say it is investing in the rear view mirror when I extensively investigated this company's potential, met with the CFO and learned about its business model.

Yes, it is an extreme model, though I could happily also point to blue chip companies like Ryman Healthcare which I have also invested in, which have seen greater than average returns (over 30%) in a few months.

One benefit that property has over shares is the ability to borrow against property value and leverage for other purchases. It's much much harder to do this for shares (and I don't recommend such activity unless you are a share trader).

I simply disagree with the premise that the only "reliable" investment is residential property investing when there are excellent opportunities in equities if you are prepared to read annual reports and ask questions, much as someone would do with analyzing property cash flows and analyzing suburb trends.