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Wall Street’s three-day rally runs out of puff on renewed economic concerns

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A three-day US stocks rally has petered out after mixed company news and disappointing European economic data renewed concerns about economic growth.

After drifting in and out of positive territory, equity indices ended nearly flat.

The blue-chip Dow Jones Industrial Average closed at 13,175.64, a gain of 7.04 points, or 0.05 per cent.

The the S&P 500-stock index edged up a scant 0.87 point (0.06 per cent) to 1,402.22 while the tech-rich Nasdaq shed 4.61 (0.15 per cent) at 3,011.25.

“The reality of more disappointing European economic news showing further slowing in major eurozone countries, including Germany, has seemingly overtaken last week’s euphoria,” said Frederic Dickson, chief market strategist at DA Davidson & Co.

Dickson also predicted investors would also begin to turn bearish, “realising that the revenue and earnings momentum has noticeably slowed over the last three months due to the deteriorating US economic landscape.”

Disney posted a record $1.83 billion profit for its fiscal third quarter ending June 30, beating expectations, but revenue growth missed estimates. Shares in the media and theme-park giant rose 1.4 per cent.

McDonald’s slid 1.7 per cent after reporting global same-store sales – sales in stores open at least a year – were flat in July.

The fast-food chain said US sales suffered from a sluggish economy and Europe’s sales were hit by weakness in Germany and several southern European markets “amidst an increasingly difficult environment.”

Hewlett-Packard surged 5.0 per cent. The world’s biggest personal computer maker said it would take an $8 billion third-quarter charge to write down services goodwill, but raised its earnings forecast excluding one-time items.

Starbucks jumped 4.4 per cent after the coffee chain announced a partnership with mobile payments start-up Square.

The economic calendar was light. The Labor Department reported US nonfarm productivity grew at an annual rate of 1.6 per cent in the second quarter, rebounding from a slight dip in the first quarter and in line with forecasts.

Bond prices rose. The 10-year Treasury yield edged up to 1.64 per cent from 1.63 per cent Tuesday, while the 30-year rose to 2.74 per cent from 2.72 per cent. Bond yields move inversely to prices.