Skip to main content

Stocks fall back as World Bank cuts growth outlook

By WTOP Staff

STEVE ROTHWELL
AP Markets Writer

NEW YORK (AP) — The stock market fell back from record levels Wednesday because of a weaker forecast for global growth and concerns about airline profits.

Delta Air Lines and other carriers fell after Germany’s Lufthansa warned of smaller profits. Boeing slid after analysts said that most of the good news about the plane maker was already priced into the stock.

Stocks opened lower after the World Bank predicted weaker global growth this year, citing a tough winter in America and the political crisis in Ukraine. The bank said late Tuesday that it expects the world economy to grow 2.8 percent this year instead of the 3.2 percent it predicted in January.

The report was a reality check for investors who had pushed major stock indexes to all-time highs this week amid optimism that the U.S. economy was strengthening. Stronger growth should translate into higher revenues and better results for U.S. companies.

Stocks “were going up so much in the last few days that they were due for a little breather,” said Brad Sorensen, director of market and sector research at Charles Schwab.

The Standard & Poor’s 500 index fell 6.90 points, or 0.4 percent, to 1,943.89. The index had closed at a record of 1,951.27 on Monday. The Dow Jones industrial average dropped 102.04 points, or 0.6 percent, to 16,843.88. The Nasdaq composite slipped 6.07 points, or 0.1 percent, to 4,331.93.

On Wednesday, airline stocks were among the big losers after Lufthansa warned of smaller profits caused by weaker passenger demand. Lufthansa AG cut its forecast for 2014 and 2015 operating income due to the weaker demand and strikes, among other reasons. Delta dropped $1.21, or 3 percent, to $40.71, making it the second-biggest loser among S&P 500 stocks.

Still, Delta’s stock is up 48 percent this year, the most of any U.S. carrier.

United Continental fell $2.50, or 5 percent, to $45.26 and American Airlines slid $1.37, or 3 percent, to $42.29.

Boeing was another big decliner.

The plane maker’s stock fell $3.15, or 2.3 percent, to $134.10 after analysts at RBC said that after three years of record orders and with no new planes in the pipeline, the good news for Boeing is “already out there.”

Despite Wednesday’s setback, the S&P 500 has been on a slow and steady climb since April and is now up 5.2 percent for the year. In recent weeks, encouraging economic reports on hiring have bolstered optimism that growth will accelerate.

The rally in stocks should continue this year as the economy strengthens, said James Liu, global market strategist at JPMorgan Funds. In the last month, stock gains have been led by the technology and consumer discretionary sectors, which should benefit more from stronger growth. This move “is going to be what drives the market further along,” Liu said.

Still, others believe that stock investors need to have more modest expectations for stock returns after last year’s big gains when the S&P 500 surged almost 30 percent. Stock valuations have already risen significantly and, after years of cost-cutting, companies may struggle to boost profit margins unless economic growth picks up significantly, said John Toohey, head of equities at USAA, a financial services company.

“Margins are high, so really how much margin expansion is left?,” said Toohey.

In government bond trading, bonds gained as stocks fell. The yield on the 10-year Treasury note, which moves inversely to its price, dropped to 2.64 percent from 2.65 percent on Tuesday.

Among other stocks making big moves;

— H&R Block jumped $1.42 cents, or 4.6 percent, to $32.15, making it the second-biggest gainer in the S&P 500. Driving the stock higher was news that the company’s earnings beat Wall Street expectations. Fourth-quarter net income at the tax preparation company surged as more people used its services and its prepaid card.

— Synaptics jumped $19.26, or 29 percent, to $85.78 after the maker of touch-screen technology said it would buy smartphone and tablet chipmaker Renesas SP Drivers for $475 million. Because of the deal, Synaptics also raised its fourth-quarter revenue outlook.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
Read Next Story

Related News

Frustration grows in Venezuela as earthquake death toll reaches 1,430

Israel and Lebanon sign framework agreement with US in ‘first step’ toward peace, Rubio says

Trump-endorsed populist poised to become Colombia’s next president as rival challenges vote