U.S. Stocks Retreat as Europe Overshadows Jobless Claims

U.S. stocks fell, sending the Standard & Poor’s 500 Index to its biggest weekly drop of the year, as renewed concern about Europe’s debt crisis overshadowed a drop in jobless claims to a four-year low.

Alcoa Inc. (AA) and General Electric Co. (GE) fell more than 1.3 percent for the biggest drops in the Dow Jones Industrial Average. Constellation Brands Inc. (STZ) lost 12 percent, the most in the S&P 500, after the company forecast earnings that missed projections. Cabot Oil & Gas Corp. (COG) rose 2.2 percent as the price of oil climbed for the first time in three days. Bed Bath & Beyond Inc. (BBBY) added 8.5 percent, leading consumer discretionary stocks higher, as the retailer’s profit beat estimates.

The S&P 500 dropped 0.1 percent to 1,398.08 at 4 p.m. New York time. The Dow fell 14.61 points, or 0.1 percent, to 13,060.14. About 5.8 billion shares changed hands on U.S. stock exchanges today, 15 percent below the three-month average.

“You have, certainly, improvement in the labor market in the U.S. but every once in a while we got reminded there still remain problems in Europe,” Greg Woodard, a portfolio strategist at Manning & Napier in Fairport, New York, which manages about $40 billion, said in a telephone interview. “The volatility is going to continue. It’s going to be choppy. The trend seems to be improvement in the U.S. and continued difficulties outside the U.S.”

The S&P 500 retreated 0.7 percent this week after reaching an almost four-year high on April 2, as demand fell at a Spanish bond auction and minutes from the Federal Reserve’s latest policy meeting damped expectations for more monetary stimulus. The gauge has still rallied 11 percent this year as U.S. economic reports surpassed estimates and investors speculated the euro-area’s sovereign debt crisis will be contained.

Jobs Data

Equities trimmed early losses after Labor Department data showed unemployment claims in the U.S. fell 6,000 to 357,000 in the week ended March 31, the fewest since April 2008. The median forecast of 43 economists in a Bloomberg News survey estimated a decrease to 355,000. The number of people on unemployment benefit rolls also dropped, while those getting extended payments increased.

A report tomorrow may show the economy added more than 200,000 jobs in March for a fourth consecutive month, the longest streak of similar increases since late 1999 to early 2000. While U.S. stock exchanges are closed tomorrow for Good Friday, index futures will trade for 45 minutes following the Labor Department’s monthly jobs report.

Stocks fell earlier as Spanish bonds declined for a third day today, pushing the spread between yields on 10-year Spanish and German debt to more than 400 basis points for the first time since Dec. 12.

‘Take Risk Off’

The S&P 500 may fall as much as 7 percent because of economic weakness in Europe, according to hedge fund manager Barton Biggs.

“I may want to take a little risk off,” Biggs, founder of Traxis Partners LP, said on Bloomberg Television’s “In the Loop” with Betty Liu. “I am cutting back a little, and I’m tempted to cut back some more,” he said. Equities are “going higher over the course of the next few months, but in the short run here we’ll have a little pause.”

The Morgan Stanley Cyclical Index lost 0.4 percent. Alcoa declined 1.8 percent to $9.63, while General Electric erased 1.3 percent to $19.49.

Constellation Brands plunged 12 percent to $21.61. The world’s largest wine company said earnings per share for the full year may be $1.93 to $2.03. Analysts projected profit of $2.23, the average of 12 estimates in a Bloomberg survey.

Polycom Inc. (PLCM), a maker of videoconferencing equipment, slumped 20 percent to $14.56 after saying preliminary first- quarter earnings and revenue fell short of analysts’ expectations.

Cabot Oil & Gas rose 2.2 percent to $31.94 as the price of crude oil rose 1.6 percent.

Consumer discretionary stocks had the biggest gain in the S&P 500, led by Bed Bath & Beyond. The retail-chain operator rose 8.5 percent to $71.85 as the company posted a fourth- quarter profit of $1.48 a share, beating the average analyst estimate of $1.32.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

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

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U.S. Stocks Erase Losses as Investors Await Government Jobs Data

Jin Lee/Bloomberg

A trader works on the floor of the New York Stock Exchange.

A trader works on the floor of the New York Stock Exchange. Photographer: Jin Lee/Bloomberg

9:12

April 5 (Bloomberg) -- Barton Biggs, managing partner and co-founder of Traxis Partners LP, talks about his investment strategy and global financial markets. Biggs speaks with Betty Liu on Bloomberg Television's "In the Loop.” (Source: Bloomberg)

3:41

April 5 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Julie Hyman report on today’s ten most important stocks including Nasdaq, Gap and Bed Bath & Beyond. (Source: Bloomberg)

5:27

April 6 (Bloomberg) -- Stephen Wood, chief market strategist at Russell Investments, talks about the U.S. economy, stocks and investment strategy. Wood also discusses Europe's sovereign debt crisis. He speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

6:33

April 5 (Bloomberg) -- William Nygren, senior portfolio manager at Oakmark Funds, talks about investment strategy. Nygren speaks with Betty Liu, Josh Lipton and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

4:13

April 5 (Bloomberg) -- Sarah Quinlan, founder of QAM and co-chair of Trader/Portfolio Management Peer Advisory Group for 100 Women Hedge Funds, talks about financial markets and the European debt crisis. Quinlan speaks with Stephanie Ruhle and Scarlet Fu on Bloomberg Television's "InsideTrack." (Source: Bloomberg)