The Standard & Poor’s 500 Index fell for the first time in seven days, ending the longest streak of gains in 20 months, as slower-than-forecast economic growth in Japan added to investor concern of a global slowdown.
Commodity shares led declines among 10 groups in the S&P 500 as Bank of America Corp. cut its outlook for Chinese growth. Alcoa Inc. and Cisco Systems Inc. fell the most in the Dow Jones Industrial Average as investors sold stocks most tied to the economy. TripAdvisor Inc. (TRIP) lost 4.5 percent after Google Inc. agreed to acquire all of John Wiley & Sons Inc.’s travel assets.
The S&P 500 slid 0.1 percent to 1,404.11 at 4 p.m. in New York. The Dow lost 0.3 percent to 13,169.43. Trading volume for exchange-listed stocks in the U.S. was about 4.5 billion shares, the lowest level since July 3 when the market closed at 1 p.m. and about 31 percent lower than the three-month average, according to data compiled by Bloomberg. The Chicago Board Options Exchange Volatility Index, known as the VIX, fell 7.1 percent to 13.70, the lowest level since 2007.
“There are some worries that while we’re all focused on Europe, China could actually be one of the reasons why GDP disappoints and that is a negative,” Jeffrey Kleintop, chief market strategist at LPL Financial Corp. in Boston, which oversees $350 billion, said in a telephone interview. “The GDP data from Japan reminds us of a risk of a hard landing in China.”
Japan, the world’s third-largest economy, expanded at an annualized 1.4 percent pace in the second quarter, trailing the median forecast for 2.3 percent growth from economists surveyed by Bloomberg. Wells Fargo & Co. reduced its earnings estimate for the S&P 500 this year as deteriorating economic data hurts profits at energy and raw-material producers.
Bank of America cut its 2012 economic growth forecast for China to 7.7 percent from 8 percent, according to a report today from Ting Lu, an economist based in Hong Kong.
The S&P 500 posted its fifth straight weekly rally after German Chancellor Angela Merkel backed a bond-buying proposal by the European Central Bank. In the U.S. last week, central bank officials debated whether more action is needed to stimulate growth. A worse-than-expected Chinese trade report on Aug. 10 added to signs the global economy is weakening, stoking speculation the government will step up measures to support expansion.
“Japan’s economy grew less than forecast and there was also speculation that China may cut rates, but now investors are thinking it’s not going to happen as quickly as speculated,” Thomas Garcia, head of equity trading at Santa Fe, New Mexico- based Thornburg Investment Management Inc., said in an e-mail. His firm oversees about $80 billion. “We have had a pretty nice run in the equity markets lately. We could see a little profit taking.”
Gina Martin Adams, Wells Fargo’s equity strategist, cut her 2012 forecast by $1 to $101 a share and reduced her projection for next year by $3 to $104, according to a note to clients dated today.
Eight out of 10 groups in the S&P 500 declined. Alcoa, the largest U.S. aluminum producer, fell 1.7 percent to $8.83. Cisco Systems lost 1.1 percent to $17.34. Exxon Mobil Corp., the world’s largest oil company by market value, slipped 0.3 percent to $88.14.
TripAdvisor, the online travel-recommendation service, lost 4.5 percent to $33.52. Google agreed to acquire all of John Wiley’s travel assets, including the Frommer’s brand, to expand local services and attract users and advertisers from sites such as TripAdvisor’s.
Google (GOOG) gained 2.8 percent to $660.01 after the owner of the world’s most popular search engine said it will cut about 4,000 jobs and shut down a third of the facilities at its Motorola Mobility Holdings Inc. unit.
Monster Beverage Corp. (MNST) lost 1.8 percent to $53.27. Goldman Sachs Group Inc. lowered its rating on beverage stocks to neutral from attractive, citing higher valuations relative to food stocks. Dr. Pepper Snapple Group Inc. decreased 0.8 percent to $44.69. The firm also lowered its rating on Coca-Cola Co. (KO) to neutral from conviction buy. The Atlanta-based company slipped 0.2 percent to $39.30.
First Solar Inc. (FSLR), the world’s biggest maker of thin-film panels, slid 4.4 percent to $20.49 after German solar-panel maker Solarworld AG reported a loss and said it won’t be profitable this year.
U.S. Steel Corp. slumped 2.4 percent to $22.86 as iron ore prices slumped to a 31-month low after purchases by China, the world’s biggest buyer, fell to the smallest in three months as slowing economic growth curbed demand.
Tesoro Corp. (TSO) climbed 9.5 percent to $38.87 for the biggest gain in the S&P 500. (SPX) The largest independent refiner on the U.S. West Coast agreed to buy BP Plc (BP/)’s California oil refinery and 800 gasoline stations in the Southwest for $1.18 billion.
Sears Holdings Corp. jumped 5.7 percent to $54.36 after Barron’s reported that the second-biggest U.S. department store company may double to $100 a share if it sells assets and improves profitability.
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