United States share markets lost half their Monday gains as the major companies reported bleak outlooks for the beginning of the reporting season.
Despite more see-sawing in trading, ABN Amro Craigs broker Peter McIntyre said the decline in the US was more steady and lacking the volatility seen during the previous two weeks' trading which saw record highs and lows on bourses around the world.
"The US markets declined overnight but in an orderly fashion and without the level of volatility we've been seeing recently," he said.
At the close of Tuesday trading, the Dow Jones Industrial Average fell 2.5%, from a 4.67% Monday gain, the broader S&P 500 fell 3.08%, from a 4.77% gain, and the tech Nasdaq closed down 4.14%, from a 3.43% gain.
It appears the worldwide pouring of trillions of dollars by US, UK and European governments to shore up financial institutions and banks, and some government guarantees for bank deposits, may be making some inroads to quelling the fortnight-long panic selling spree by investors.
The New Zealand stock market SE 50 index, while down 27% on the year, closed up 2.9% on Monday and up 2.15% on Tuesday, but yesterday traded down about 2% on opening and ended the day 1.78% down, on low turnover of $52 million.
Mr McIntyre said the the market was acting "with caution", but otherwise "fully expecting" a 1% cut to the official cash rate today by the Reserve Bank.
In the US, Mr McIntyre said, there was a move by investors leaving growth stocks for more defensive stocks, mainly in the utilities and telecommunications sector.
However, as the the US enters its third-quarter reporting season and some companies are reporting strong revenue and were meeting market expectations, investor sentiment is scrutinising forward outlooks for the next 12 months.
"[US] business are going back to core activities, best practice methods and cutting excesses, which is being reflected in the rising unemployment rate in the US," Mr McIntyre said.
Technology and agrichemical company DuPont saw its share prices decline 8%, despite its result beating market expectations, while Yahoo is laying off 600 staff after reporting its third-quarter earnings plummeted 64% and wants to reduce costs $US400 million by the end of the year.
The world's largest machinery manufacturer, Caterpillar, saw third-quarter sales below expectation and forecast slower domestic growth, reporting a decline in quarterly after-tax profit to $US868 million.
Mr McIntyre said companies with closer ties to Europe and the UK markets were coming under more pressure from investors concerned about the effects of world recession.
