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Midday Market Update

Global Sell-Off Forces Stocks Lower

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U.S. Market    
Stocks began the week in a sluggish state as continuing worries about the Fed tapering its bond-buying program and a sharp sell-off overseas sent U.S. stocks lower. 

In addition to speculation about the Fed's current easing policies, China made headlines Monday after  Goldman Sachs Group (GS) cut its forecast for real gross domestic product growth for the country for both the current quarter as well as 2013 and 2014. There was a steep drop in Chinese stocks, particularly in the financials sector, on worries of a liquidity crunch and implications that the country's central bank will not inject more liquidity into the system to assist struggling banks.

Meanwhile, the Federal Reserve Bank of Dallas said its business activity index rose to 6.5 this month from negative 10.5 in May. The subindexes mostly improved in June. Separately, the Chicago Fed's national activity index improved in May from April, but the reading still remained below zero at negative 0.30, pointing to slower-than-normal economic growth. 

The Dow had fallen by 1.5% at midday. The S&P 500 had lost 1.9%, while the Nasdaq was 1.7% lower. 

Stocks on the Move
 Vodafone Group (VOD) agreed on Monday to acquire Kabel Deutschland for EUR 7.7 billion ($10.1 billion) or EUR 87 per share. While the deal has been rumored off and on for months and Morningstar analysts haven't been too excited about the possibility, seeing the potential synergies helps.  Due to Vodafone's existing operations, including 32.4 million wireless subscribers and the second-largest fixed-line network in Germany, there are extensive opportunities for cost savings. Vodafone's ADR shares were down 0.3% at midday. 

 United States Cellular (USM) has announced that Mary Dillon, its president and CEO since June 2010, is leaving to take the chief executive role at Ulta Salon, Cosmetics & Fragrance. Ken Meyers, who is CFO and executive vice president at  Telephone and Data Systems (TDS) (which owns more than 80% of U.S. Cellular) and a member of U.S. Cellular's board of directors,  has been tapped to replace Dillon and officially take the reins July. U.S. Cellular shares had lost 1.5% by midday, while TDS shares fell by 3.5%. 

Foreign Markets
Overseas markets all lost ground Monday on the aforementioned China and U.S. central-bank worries. The Shanghai Composite plunged by 5.3%, and the Hang Seng lost 2.2%. The Nikkei 225 was 1.3% lower. 

In Europe, the Paris CAC fell by 1.7%, and the DAX lost 1.3%. The FTSE 100 was 1.4% lower.

Kevin O'Shaughnessy does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.