Stocks Drop on Global Economic Forecast

Stocks closed lower for the seventh day out of the last eight on Monday after the International Monetary Fund reduced its global economic outlook.  The Dow Jones Industrial Average fell 49.88 points, or 0.39%, to 12,727.21. The S&P 500 index declined 3.14 points, or 0.23%, to 1,353.64. The Nasdaq Composite lost 11.53 points, or 0.40%, to 2,896.94.

The global recovery is “weak” and faces growing downside risks coming primarily from Europe, the top economist at the International Monetary Fund said Monday. “The main risk is obvious. It is that the vicious cycles in Spain and Italy become stronger,” said IMF chief economist Olivier Blanchard at the organization’s quarterly world economic outlook.

Manufacturers in the New York region said business improved modestly in early July, after barely expanding in June, according to a report released Monday by the New York Federal Reserve Bank. The Empire State index rose to 7.4 in July from 2.3 in June.

A new version of Microsoft’s widely used suite of word processing, spreadsheet and email programs is expected to be unveiled in San Francisco. Microsoft has declined to say what the Monday afternoon event is about, but it says CEO Steve Ballmer will be there to provide details.

Shares of Yahoo Inc. rose in Monday’s after-hours trading session, following news that the company named veteran Google Inc. executive Marissa Mayer as its new chief. Mayer will join Yahoo on Tuesday, replacing interim chief Ross Levinsohn, and also will become president and a member of the board of directors, the Sunnyvale, Calif.-based Yahoo (NASDAQ:YHOO) announced after the market closed Monday.

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