U.S. stocks retreated, sending the Standard & Poor’s 500 Index to the longest losing streak since February 2009, as raw-material and financial shares slumped amid growing concern the economy is slowing.
Visa Inc. (V) and MasterCard Inc. (MA) fell at least 1.5 percent after the U.S. Senate rejected a six-month delay of a Federal Reserve rule capping debit-card swipe fees set by the companies. Ciena Corp. (CIEN), the maker of network gear for the biggest U.S. phone companies, tumbled 16 percent after reporting a wider- than-estimated loss. Gap Inc. (GPS) slumped 2.4 percent after Barclays Plc cut its recommendation for the largest U.S. apparel chain.
The S&P 500 fell 0.4 percent to 1,279.56 at 4 p.m. in New York, dropping for a sixth day. The Dow Jones Industrial Average slid 21.87 points, or 0.2 percent, to 12,048.94 today.
“There’s enough fear,” said Sara Zervos, a New York-based portfolio manager at OppenheimerFunds Inc., which managed more than $185 billion as of March 31. “We’re getting into that negative side of things. This is a soft spot granted it’s been a very significant string of bad data.”
Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. recovery was “frustratingly slow.” From March 16, when the S&P 500 fell to its lowest level of the year, industries less-tied to economic growth -- health care, consumer staples, telecommunications and utilities -- have risen the most among 10 groups in the index.
The Fed today said the economy expanded at a “steady pace” in most of the U.S. while slowing in four of 12 regions as consumers contended with higher food and fuel prices and shortages of parts reduced auto production.
Reports from the Fed’s district banks “indicated that economic activity generally continued to expand since the last report, though a few districts indicated some deceleration,” the Fed said today in its Beige Book survey of the economy in Washington.
Manufacturing “continued to expand in most parts of the country,” while slowing in some areas. Consumer spending was “mixed,” it said, while the job market improved “gradually across most of the nation.”
Stocks extended a worldwide slump today after the World Bank said global gross domestic product may expand 3.2 percent this year, less than the 3.3 percent forecast in January. German industrial production unexpectedly declined for the first time in four months in April, the government said.
Visa dropped 3.9 percent to $76.71. MasterCard declined 1.5 percent to $270.
Senator Richard Durbin of Illinois, the No. 2 Democrat in the chamber, led the opposition to the delay amendment, which was defeated in a 54-45 vote. The measure needed 60 votes for approval. The central bank now has until July 21 to implement the final rule on capping the fees, which accounted for more than $16 billion in 2009, according to the Fed.
In December, the Fed proposed capping the swipe fees, or interchange, at 12 cents a transaction, replacing a formula that averages 1.14 percent of the purchase price.
Ciena tumbled 16 percent to $20.29. The maker of network gear for the biggest U.S. phone companies reported second- quarter adjusted loss of 24 cents a share. On average, the analysts surveyed by Bloomberg estimated a loss of 11 cents. JDS Uniphase Corp. fell 5.5 percent to $17.40.
Gap retreated 2.4 percent to $17.49. Barclays cut its recommendation for the largest U.S. apparel chain to “equal weight” from “overweight,” citing risks to sales improvement.
Raw Material Stocks
A gauge of raw material stocks in the S&P 500 sank 1 percent, the most within 10 groups, amid concern about slower demand for metals. Freeport-McMoRan Copper & Gold Inc. (FCX), the largest publicly traded copper producer, dropped 1.9 percent to $48.82. Alcoa Inc. decreased 1.8 percent to $15.41.
Energy shares gained the most among 10 S&P 500 industry groups as crude oil rose. Secretary General Abdalla el-Badri of the Organization of Petroleum Exporting Countries said ministers were unable to reach a decision on production quotas at their meeting in Vienna today and will maintain their current output.
Exxon Mobil Corp. (XOM) added 1 percent to $80.76 for the third- biggest gain in the Dow. The world’s largest energy company by market value discovered the equivalent of 700 million barrels of oil in three deep-water Gulf of Mexico wells.
Cabot Oil & Gas Corp. (COG) climbed 4.3 percent, the most in the S&P 500, to $58.31. The Houston-based natural gas producer was boosted to “buy” from “hold” at Canaccord Genuity, which cited “significantly higher” expected output at Marcellus Shale fields.
U.S. stocks whose earnings are most correlated to economic growth may decline more than other industries as a gauge of the shares nears its 200-day moving average, according to top-ranked UBS AG technical analysts.
The Morgan Stanley Cyclical Index of 30 stocks, including Alcoa Inc. (AA) and Ford Motor Co., may fall 3 percent to 980 if it breaches major support levels at 1,024 and 1,010, according to a report from UBS analysts Michael Riesner and Marc Muller yesterday. The gauge closed at 1,035.20 yesterday.
“From a cyclical standpoint, the month of June should be weak for risk assets,” Riesner and Muller wrote in the report. “On a short-term basis, the U.S. market looks oversold and could bounce later this week, but given the poor picture in technical indicators and the increasing technical damage in key sectors, new lows in financials and cyclicals/energy complex sitting on key support, we are sticking to our cautious market stance.”