U.S. equity markets tank, Oct. 22-26

GDP growth in the U.S. increased at an annual rate of 2% in the third quarter, up from 1.3% in the second quarter, but earnings disappointments from a slew of U.S. multinational companies, including Apple, and worries about slowing global growth and uncertainty over the upcoming presidential elections on Nov. 6, ramped up risk aversion. The Dow Jones Industrial Average index dropped 1.77% or 236.30 points to end the week at 13,107.21, while the S&P 500 index fell 1.48% or 21.25 points to finish at 1,411.94. The Philadelphia Gold and Silver index lost 1.66% to close at 182.72.

Cost-cutting measures at Arch Coal helped the company post better-than-expected earnings in the third quarter. Net income reached US$45.8 million or US$0.22 a share in the July-September period, up from US$8.9 million or US$0.04 per share in the year-earlier quarter. Revenue fell 9% to US$1.09 billion. The coal producer forecasts capital spending of about US$350 million in 2013, below its 2012 estimate of between US$410 million and US$430 million. Arch was the most actively traded stock of the week and its shares rose US$0.18 to close at US$8.09.

Peabody Energy climbed 9% or US$2.33 to US$28.22 per share after the coal miner reported that a combination of expanded margins in the U.S. and record volumes and aggressive cost-control measures helped offset price declines in Australia in the third quarter. Peabody’s results for the quarter ended Sept. 30 beat expectations on the Street. The company posted a profit of US$122.9 million or US$0.46 per diluted share compared with US$291.2 million or US$1.04 per share in the third quarter of 2011. Revenues rose to US$2.06 billion from US$1.98 billion in the year-earlier quarter. In other news Reuters reported following an interview with the company’s chief executive, Gregory Boyce, that the coal miner expects to resume talks with the Mongolian government over acquiring a stake in the western Tsankhi block of Tavan Tolgoi some time early next year.

On the negative side of the ledger, shares of Cliffs Natural Resources plunged 17.9% or US$7.96 a share to finish the week at US$36.49 after the company posted a huge drop in profits on lower iron ore prices and higher costs. Third-quarter profit fell 85% to US$85.1 million, or US$0.59 a share, compared with US$601.2 million or US$4.15 a share in the year-earlier quarter. Revenue slid 26% to US$1.5 billion.