U.S. Stocks Fall on Economic Data as Energy Shares Slump

U.S. stocks fell, sending the Standard & Poor’s 500 Index down for a second day, as a slump in crude oil drove energy producers lower and government data showed that orders for durable goods rose less than forecast.

Exxon Mobil Corp. and Occidental Petroleum Corp. (OXY) paced losses in 42 out of 43 energy companies in the S&P 500 as oil slumped following an increase in supplies. The Morgan Stanley Cyclical Index of companies most-tied to the economy lost 1.6 percent as Federal Reserve Chairman Ben S. Bernanke said the recovery isn’t assured. Caterpillar Inc. (CAT) and Alcoa Inc. (AA) slid more than 2.2 percent. Financial shares had the only gain among 10 S&P 500 groups as Bank of America Corp. rallied 1.6 percent.

The S&P 500 slid 0.5 percent to 1,405.54 at 4 p.m. New York time. While the benchmark gauge has lost 0.8 percent in two days, it rebounded from its intraday low of 1,397.20 in the final two hours of trading. The Dow Jones Industrial Average declined 71.52 points, or 0.5 percent, to 13,126.21 today.

“Investor jitters have been heightened by another economic report coming in a bit light and by the Fed chairman suggesting the economy may be vulnerable to another period of turbulence,” said James Paulsen, who helps oversee about $333 billion as chief investment strategist at Minneapolis-based Wells Capital Management. “The selloff is also being fueled by a collapse in energy stocks. After such a significant advance in the market, investors are already worried about a correction.”

Today’s loss pared this month’s rally in the S&P 500 to 2.9 percent. The index is still poised for the best first quarter since 1998, up 12 percent. Financial and technology shares have risen the most among 10 groups, surging more than 21 percent so far in 2012.

Economic Data

Stocks fell today after a Commerce Department report showed that bookings for goods meant to last at least three years advanced 2.2 percent, less than projected after a revised 3.6 percent decline the prior month. Bernanke said unemployment remains too high, the economic recovery isn’t guaranteed and policy makers don’t rule out any further options to boost growth.

“It’s far too early to declare victory,” Bernanke said, according to a transcript of last night’s interview with ABC News anchor Diane Sawyer provided by the network. “The recent news has been good. But I think we need to be cautious and make sure this is sustainable. And we haven’t quite yet got to the point where we can be completely confident that we’re on a track to full recovery.”

Energy and raw-material producers had the biggest losses in the S&P 500 among 10 groups, falling at least 1.2 percent. Crude oil for May delivery tumbled 1.8 percent to $105.41 a barrel on the New York Mercantile Exchange. Exxon (XOM) slipped 0.9 percent to $85.86. Occidental Petroleum dropped 3.6 percent to $94.85.

Coal Shares

Coal producers slipped. U.S. electricity generators are on track to burn 22 percent less coal this year than in 2011, said Lucas Pipes, an analyst at Brean Murray Carret & Co. in New York, citing data published in Coal & Energy Price Report, an industry newsletter. Alpha Natural Resources Inc. (ANR) fell 4.2 percent to $14.87. Peabody Energy Corp. (BTU) declined 3.4 percent to $28.83.

Concern about the economy weighed on companies whose earnings are most-dependent on growth. Alcoa retreated 2.3 percent to $9.83. Caterpillar lost 3.5 percent to $104.26.

Walt Disney Co. (DIS) dropped 1.5 percent to $43.51. Rupert Murdoch’s News Corp. is taking steps to start a national U.S. sports network on cable television aimed at challenging Disney’s ESPN, according to people with knowledge of the situation.

Defective Packs

A123 Systems Inc. (AONEQ) plunged 13 percent to $1.22, the lowest price since it went public in 2009. The battery maker may be unable to raise capital and could lose contracts as a result of its recall of defective packs sent to customers, a Deutsche Bank AG analyst said.

Arena Pharmaceuticals Inc. (ARNA) fell 10 percent to $2.92 in its biggest drop since August. The biotechnology company was cut to neutral from overweight at Piper Jaffray Cos., which cited the share price. The stock had gained 85 percent from March 16 through yesterday.

The KBW Bank Index rallied 1.1 percent as 22 of its 24 stocks gained. Bank of America increased 1.6 percent to $9.75 after the lender slumped 3.3 percent yesterday..

Medco Health Solutions Inc. added 3.2 percent to $71.20 after saying it expects its $29.1 billion takeover by Express Scripts Inc. to close as soon as next week. Express Scripts will probably get a Federal Trade Commission ruling on the deal as early as March 30, said two people familiar with the case who declined to be identified because the review is private. Express Scripts increased 1.3 percent to $53.89.

Takeover Offer

Amylin Pharmaceuticals Inc. surged 54 percent, the most in the Russell 1000 Index (RIY), to $23.77. The maker of the diabetes drug Bydureon rejected a $3.5 billion unsolicited takeover bid from Bristol-Myers Squibb Co. (BMY) earlier this year, two people with knowledge of the matter said.

Pentair Inc. rallied 15 percent to $46.32. The maker of Everpure water filters agreed to combine with the Tyco (TYC) International Ltd. division that makes valves and other flow-control instruments in a deal that values Tyco Flow at $4.53 billion. Tyco increased 4.3 percent to $55.81.

U.S. companies are better positioned for “cashing out” shareholders than at any other time in more than half a century, according to Myles Zyblock, chief institutional strategist at RBC Capital Markets.

Corporate cash increased by more than $200 billion in each of the past three years, including a $340.9 billion surge last year. Companies are poised to sustain the growth rate in their “cash mountain,” Zyblock wrote two days ago in a report.

Low Rates

Many companies are raising more money through bond sales because interest rates are low, the Toronto-based strategist wrote. The yield on a Moody’s Investors Service index of Baa rated corporate debt has averaged 5.2 percent this quarter, about 0.9 percentage point less than a year earlier.

Increased cash and relatively cheap debt financing will lead to growth in dividends as well as stock repurchases, the report said.

Health-care and technology companies have the most room to lift payouts and buy back more shares, Zyblock wrote. The groups have the highest percentage of cash to assets for non-financial companies, based on figures for the S&P 500 that he cited. Energy producers are another possibility, he added, because they have relatively little debt.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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