Aug. 29 (Bloomberg) -- U.S. stocks fell, paring the biggest monthly gain since April, as consumer spending slumped and lower- than-estimated earnings from Dell Inc. dragged down technology companies.
Starbucks Corp. and Amazon.com Inc. each lost more than 2 percent in Nasdaq Stock Market trading after the government said growth in spending slowed to 0.2 percent in July as incomes declined 0.7 percent. Dell, the second-biggest personal-computer maker, had the biggest drop since November. Constellation Energy Group Inc., the largest U.S. power marketer, drove all 31 utility companies in the Standard & Poor's 500 Index lower after Jefferies Group Inc. downgraded the stock.
The Standard & Poor's 500 Index slipped 11.85 points, or 0.9 percent, to 1,288.83 at 1:47 p.m. in New York, ending a three-day advance. The Dow Jones Industrial Average lost 122.05, or 1 percent, to 11,593.13. The Nasdaq Composite Index retreated 37.66 to 2,364.29. Two stocks fell for each that rose on the New York Stock Exchange.
``The environment remains challenged for the equity market,'' Mike Ryan, head of wealth management research for the Americas at UBS Financial Services Inc., told Bloomberg Television. ``As we're faced with the impact of higher energy costs and the lack of availability of credit, that's going to put more pressure on the consumer sector.''
Technology and retailer shares led stocks lower as the Commerce Department report also said prices excluding food and energy, the Federal Reserve's preferred gauge, climbed 2.4 percent on a yearly basis. The data overshadowed a better-than- forecast reading of 63 in the Reuters/University of Michigan consumer sentiment index and damped optimism spurred by better- than-estimated growth in gross domestic product yesterday and an unexpected increase in orders for durable goods on Wednesday.
Cyclicals Slump
The Morgan Stanley Cyclical Index, a gauge of companies that rely the most on economic expansion to boost profits, lost 1 percent today as 21 of its 30 stocks fell. The gauge jumped 2.5 percent yesterday for its steepest advance in three weeks.
The S&P 500 has gained 1.6 percent in August, snapping a two-month retreat that sent the measure to an almost three-year low on July 15. The rally was fueled by the 22 percent drop in oil from a record, a jump in the dollar and growing speculation that the worst of banks' mortgage losses are over.
Starbucks, the biggest coffee-shop chain, slid 2.6 percent to $15.57, while Amazon, the largest Internet retailer, fell 2.4 percent to $81.46.
Dell sank 13 percent to $22.02. The company said ``continued conservatism'' from some U.S. customers is spreading to western Europe and some Asian countries. Sales growth in those areas slowed last quarter and profit missed analysts' projections after Dell reduced prices.
`A Hard Time'
Hewlett-Packard Co., the biggest PC maker, lost 0.3 percent to $47.17. Microsoft Corp. retreated 1.7 percent to $27.47, while Intel Corp., the largest chipmaker, slumped 2.5 percent to $23.01. Technology companies collectively fell 2 percent, the most in a month, for the steepest decline among 10 S&P 500 industries.
``Anything that's related to the consumer is going to have a hard time and is more than likely going to miss expectations,'' said Tom Wirth, senior investment officer at Chemung Canal Trust Co. in Elmira, New York, which manages $1.8 billion. Weakness in technology stocks ``has to do with the consumer having to rein in their spending.''
Marvell Technology Group fell 4.6 percent to $14.08 after the maker of chips for Apple Inc.'s iPhone predicted sales in the current quarter of $860 million to $880 million, missing the $889.2 million estimated by analysts in a Bloomberg survey.
Utilities Drop
All 31 stocks in the S&P 500 Utilities Index dropped, sending the industry group down 1.5 percent for its steepest loss in almost three weeks.
Constellation Energy Group Inc. fell 2.5 percent to $66.81. The biggest U.S. power marketer was cut to ``underperform'' from ``hold'' by Jefferies analysts.
International Paper Co. sank 3.9 percent to $27.19, the biggest drop in three months, after Deutsche Bank AG cut the world's largest maker of office paper to ``hold'' from ``buy.''
Fannie Mae fell for the first time this week, losing 9.4 percent to $7.20. Freddie Mac dropped 9.1 percent to $4.80. Bank of China Ltd., the nation's third-largest bank, pared holdings of corporate debt from the two largest U.S. mortgage-finance companies in the past two months amid concern on the potential need for a U.S. government bailout. Separately, the Washington Post reported that Freddie Mac's capital cushion may not be enough to cover losses.
Financials Retreat
SLM Corp. retreated 1.2 percent to $16.76. The biggest U.S. college lender cut the amount it can borrow for education loans through two banking agreements by $6.3 billion, or 20 percent, prompting Moody's Investors Service to consider downgrading SLM debt.
PetSmart Inc. increased 12 percent to $27.24. The largest U.S. pet-store chain said second-quarter profit fell less than analysts estimated, helped by increased boarding and grooming sales for dogs and cats.
The S&P 500 and the Dow average have both fallen less than 1 percent this week. The Nasdaq Composite Index has slipped almost 2 percent for the worst week since the beginning of July.
The S&P 500 is poised to complete only its third monthly advance since reaching a record in October. It is still down 11 percent this year.
The S&P 500's August gain has been led by so-called consumer discretionary companies, which include retailers and hotel and restaurant chains. The S&P 500 Consumer Discretionary Index rallied 8.1 percent this month for the best gain among 10 industries through yesterday
An index of technology shares in the S&P 500 had the second- best return in August with a 4.6 percent rally through yesterday, led by a 48 percent jump in Advanced Micro Devices Inc.
U.S. markets will be closed on Sept. 1 for the Labor Day holiday.
To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.
Posts
No comments:
Post a Comment