Wall Street lower as IMF cuts growth forecasts

US REPORT:Dow Jones: 12,381.11 (+1.06) SP 500: 1,324.46 (–3.71) Nasdaq: 2,771.51 (–8.91)

US STOCKS fell yesterday, sending the Standard and Poor’s 500 Index down for a third day, after oil dropped from a 30-month high as the International Monetary Fund cut its growth forecasts for the world’s largest economy.

Occidental Petroleum and Anadarko Petroleum slumped at least 3.2 per cent as crude oil fell 2.5 per cent.

General Motors retreated 2.4 per cent after China said 2011 car sales may grow more slowly than estimated.

Tyco International jumped 3.5 per cent as people with knowledge of the matter told Bloomberg News that Schneider Electric is weighing a takeover offer for the maker of security systems.

“There’s clearly a defensive tone,” said Bruce McCain, who oversees $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “The IMF report got people concerned,” he said. “The stock market is stuck, trying to break the previous high. There’s hope that the first-quarter earnings season will be good and that we’ll see more takeovers. That would be good for stocks.”

The SP 500 has risen 5.3 per cent in 2011 amid government stimulus measures and as corporate profits beat analysts’ estimates for an eighth straight quarter.

Earnings for SP 500 companies rose 12 per cent in the first quarter and will increase 17 per cent this year, according to analyst estimates compiled by Bloomberg.

Oil fell from a 30-month high after the International Monetary Fund lowered its forecast for US growth this year, predicting higher oil prices and the pace of job gains will restrain the recovery. The world’s largest economy will expand 2.8 per cent this year, down from the 3 per cent projected in January, the IMF said yesterday.

Alcoa shares slid 0.8 per cent to $17.77 after rising earlier. The company was seen posting growth in both earnings and revenue.

In corporate news, Tenet Healthcare said it has sued its suitor, Community Health Systems, claiming the rival hospital operator admitted patients for stays that were not needed to overbill insurers, including Medicare. Shares of Tenet sank 14.7 per cent to $6.44 while Community slumped 36 per cent to $25.89. – (Bloomberg/Reuters)