Market turbulence affects R.I. companies, but UNFI bucks trend

PROVIDENCE – United Natural Foods Inc. was able to withstand the turmoil that engulfed Wall Street on Friday, sending the Dow Jones Industrial Average into a correction and marking the worst week in three years for the Standard & Poor’s 500 index. The broad market indicator fell 5.7 percent on the week to 1,970.89.
United Natural Foods Inc. saw its shares rise 3.8 percent to close at $48.15 from Monday’s opening at $46.37.
Other local companies did not fare as well.
International Game Technology PLC recorded the biggest decrease in share price over the week among select companies with significant Rhode Island operations at 11.7 percent to $17.22 from $19.50. Next was Textron Inc., which saw shares fall 8.6 percent to $39.76 from $43.52, and Bank of America, which had an 8.57 percent drop to $16.10 from $17.61.
Results from other local companies are as follows:

  • Amgen fell 7.1 percent to $155.19 from $167.05
  • Citizens Financial Group Inc. fell 6.6 percent to $24.57 from $26.31
  • CVS Health Corp. fell 4.5 percent to $102.21 from $107.07
  • General Dynamics (parent of Electric Boat) slipped 3.9 percent to $145.17 from $151.08
  • Hasbro Inc. dropped 6.3 percent to $75.18 from $80.20
  • Washington Trust Bancorp Inc. decreased 3.1 percent to $38.51 from $39.73

More than $3.3 trillion has been erased from the value of global equities after China’s decision to devalue its currency spurred a wave of selling across emerging markets. The worries over slower economic growth come as a strong dollar and plunge in oil prices take a toll on corporate earnings at the same time the Federal Reserve is contemplating the first boost to interest rates since 2006.
“For much of this year, the glass was considered half full and now people the last 48 hours are thinking it’s looking more empty,” George Hashbarger, who oversees $224 million as CEO and portfolio manager at Knoxville, Tenn.-based Quintium Advisors LLC, said by phone. “This is more like October than it is buy-the-dip.”
Volatility surged as Standard & Poor’s 500 Index capped the worst week in three years while Europe entered a correction and stocks from Hong Kong to Indonesia tumbled into bear markets. Junk bond yields rose to the highest since October 2012, and U.S. Treasuries had the largest weekly gain in five months. Oil sank below $40 a barrel for the first time since 2009 and was set for its longest losing streak since 1986.
The S&P 500 is down more than 7 percent from a record after sinking below a trading range that has supported it for most of the year. The Dow Jones Industrial Average fell more than 500 points Friday, and more than 1,000 points on the week. It is down 10 percent from its record high in May.

Fab five

Investors are selling the biggest winners of 2015. Companies that have come to be known as the Fab Five – Netflix Inc., Facebook Inc., Amazon.com Inc., Google Inc. and Apple Inc. – have seen $97 billion in market value erased over two days. Losses have pushed the Nasdaq 100 Index down 7 percent, the biggest two-day decline since 2008. Apple entered a bear market, dropping 20 percent from a February high.
Before this week, U.S. equities had held their ground throughout 2015. The S&P 500 had stayed within a range roughly tracking its 50-, 100- and 200-day moving averages, boosted by signs the economy is recovering and support from central banks. The benchmark index hadn’t had a decline of more than 5 percent all year.

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China data

The selloff “simply means that all areas of the market are in gear now, and unfortunately it’s on the downside,” Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $110 billion, said in an interview on Bloomberg Television’s “Market Makers” with Cory Johnson and Olivia Sterns. “Investors have to be much more careful now with that technical development.”
The week’s retreat from the riskiest assets picked up speed as data showing a gauge of China manufacturing at the lowest level in more than six years highlighted the challenges facing the nation’s economy.
The MSCI All-Country World Index tumbled 2.6 percent Friday to the lowest since October. The MSCI Emerging Markets Index slid 2.3 percent, with the Malaysian ringgit and South Korean won leading currencies lower. Investors have sought safety in the yen, which strengthened for a third day against the dollar.
“This week’s selloff started from the yuan’s devaluation, which generated speculation about the true state of China’s economy,” Hertta Alava, who helps oversee the equivalent of $395 million as the head of emerging markets at FIM Asset Management Ltd. in Helsinki, said by email. “China’s PMI was weak, so it is just adding fuel to this negativity.”
Hong Kong’s Hang Seng Index dropped 1.3 percent, taking declines since an April high beyond 20 percent. The Shanghai Composite Index slumped 4.3 percent, bringing the week’s loss to more than 10 percent and coming within one point of erasing all gains since the government began efforts to prop up the market in July.
“The whole world’s looking a little bit sad,” said Mark Lister, head of private wealth research at Craigs Investment Partners Ltd. in Wellington, N.Z., which manages about $7.2 billion. “China still looks really worrying on a number of fronts.”

Europe correction

The Stoxx Europe 600 Index lost 3.3 percent, as the selloff engulfed all Western European markets and industries in the benchmark gauge. The index had its worst weekly loss since 2011, down 6.5 percent. It is down 13 percent from an April high, entering a correction.
Trading patterns show the declines are poised to slow. The 14-day relative strength index on the MSCI All-Country World Index closed below 30 on Thursday, a level that signals an asset is poised to rebound, according to some technical analysts.
Amid the selloff, the S&P 500 is trading at 17.5 times earnings. That’s down from 18.9 times a month ago, which was near a five-year high, though still exceeds the five-year historical average of 16.1 times profit.
U.S. Treasuries are poised for their biggest weekly gain in five months as demand for fixed income soared. Ten-year notes also drew support from signs the Federal Reserve will keep interest rates close to zero for longer, and from a decline in oil prices that helped push a gauge of inflation expectations toward its lowest since 2010.
Futures show that traders see a 34 percent chance the Fed will raise interest rates at its September meeting, down from a 48 percent probability at the end of last week.