U.S. Stocks Fall as Investors Await Fed Stimulus Signals

U.S. stocks fell, following the first weekly decline in about two months for the Standard & Poor’s 500 Index, as investors awaited indications on whether the Federal Reserve will provide further stimulus measures.

Hewlett-Packard Co., Alcoa Inc. and Bank of America Corp. dropped at least 1.1 percent to pace losses in the biggest companies. Apple Inc., (AAPL) the most valuable company, climbed 1.9 percent after a jury found Samsung Electronics Co. infringed six of seven patents for its mobile devices. Google Inc. (GOOG), which offers the Android mobile software, declined 1.4 percent.

The S&P 500 slid 0.1 percent to 1,410.44 at 4 p.m. New York time. The Dow Jones Industrial Average fell 33.30 points, or 0.3 percent, to 13,124.67. The Nasdaq-100 Index gained 0.2 percent to 2,782.55, after rising to the highest since 2000 during the day. Volume for exchange-listed stocks in the U.S. was 4.5 billion shares, the lowest level since at least 2008 excluding days surrounding holidays, data compiled by Bloomberg show.

“There’s no great conviction in either direction,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. He spoke in a phone interview. “There are a couple of bright spots, such as Apple. People are looking ahead for Fed signals. I believe Bernanke’s speech will probably be more of the same. It’s more likely that it will be a continuation of what we’ve been hearing and less of an event.”

Fed Chairman Ben S. Bernanke probably won’t use his Aug. 31 speech at the Fed’s annual symposium in Jackson Hole, Wyoming, to suggest a third round of bond buying is at hand, according to economists such as Michael Feroli at JPMorgan Chase & Co. and James O’Sullivan at High Frequency Economics.

Monthly Gain

The S&P 500, which last week failed to stay above a four- year high, is still on pace for its third straight monthly gain amid bets central banks will provide further economic stimulus. The index has risen 2.3 percent so far in August.

Commodity, phone and industrial shares had the biggest losses in the S&P 500 among 10 groups. HP dropped 2.1 percent to $17.21, the lowest since 2004. Alcoa slid 1.7 percent to $8.48. Bank of America retreated 1.1 percent to $8.07. Technology shares in the S&P 500 rose 0.2 percent as a group.

Apple gained 1.9 percent to a record $675.68. Victories in patent disputes over phones using Google’s Android may extend, rather than end, the litigation that’s lasted more than two years and spanned four continents. The jury verdict won Aug. 24 against Samsung came shortly after a trade agency in Washington cleared Apple of some claims by Google’s Motorola Mobility unit that could have led to a U.S. ban on the iPhone and iPad.

Steve Jobs

Together, the decisions embolden Apple to continue the campaign envisioned by its late co-founder, Steve Jobs, to prove phones running on Android copied the iPhone’s features and designs. Apple won’t stop unless there’s a decisive blow against it, and Samsung, with its reputation at stake, also has little incentive to settle, said Tom Scott, a patent lawyer at Goodwin Procter LLP.

“Most commercial disputes are on the merits of the case,” said Scott, chairman of the firm’s intellectual property group in Washington. “This is different. It’s a war. It’s an economic war.”

Google dropped 1.4 percent to $669.22.

Best Buy Co. added 3.2 percent to $17.87. The world’s largest electronics retailer and founder Richard Schulze reached an agreement allowing him to conduct due diligence in his effort to acquire the company a week after earlier talks failed.

Dollar Thrifty Automotive Group Inc. (DTG) rallied 7.5 percent to $87.08. Hertz Global Holdings Inc. (HTZ) struck a deal to buy the company for about $2.6 billion in cash and secure its place as the No. 2 player in the U.S. market. Hertz jumped 8.1 percent to $14.21.

Hudson City

Hudson City Bancorp soared a record 16 percent to $7.45. M&T Bank Corp. (MTB), which counts Warren Buffett’s Berkshire Hathaway Inc. among its largest investors, agreed to buy the bank to expand in New Jersey in a deal valued at about $3.7 billion. Under terms of the agreement, each Hudson City shareholder will receive 0.08403 of an M&T share in the form of either M&T stock or cash. M&T climbed 4.6 percent to $89.82.

Kenexa Inc. jumped 41 percent to $45.79. International Business Machines Corp. (IBM) will spend about $1.3 billion for the maker of Web-based human-resources and recruiting services, part of its effort to reach $16 billion in annual analytics revenue. IBM slipped 1.1 percent to $195.69.

Tiffany & Co. (TIF) climbed 7.2 percent to $62.71. The world’s second-largest luxury jewelry retailer reported a drop in worldwide comparable-store sales that was smaller than some analysts projected.

Buyback, Dividend

AOL Inc. (AOL) gained 2.9 percent to $33.86 after announcing a $600 million accelerated stock buyback agreement and a special cash dividend of $5.15 a share, the final steps in returning about $1.1 billion to shareholders.

ImmunoGen Inc. (IMGN) rose 5.6 percent to $14.62. Partner Roche Holding AG said its experimental breast cancer drug significantly extended the lives of patients when compared with standard therapy.

American stocks are dominating global equities by the most in a decade, taking a majority of the spots in a ranking of the 20 biggest companies, after earnings rose faster than the rest of the world as the global economy rebounded. Apple, International Business Machines Corp., Wells Fargo & Co. and four more U.S. companies joined the top 20 since stocks peaked in 2007, bringing the total to 14.

They replaced Moscow-based Gazprom OAO, China Petroleum & Chemical Corp. in Beijing, Petroleo Brasileiro SA of Rio de Janeiro and six others from Europe and Asia. Of the nine added, only BHP Billiton Ltd. and Nestle SA (NESN) are based outside the U.S.

10 Quarters

More U.S. corporations are represented than any time since 2003 after 10 quarters of economic expansion and profit growth lifted the S&P 500 109 percent since shares bottomed in March 2009. The shift reflects volatility in emerging markets and shows how innovation builds value in the U.S.

“The U.S. is just the best place on the planet to have a great idea and turn it into a big business,” according to Michael Shaoul, chairman of New York-based Marketfield Asset Management, which oversees $2.7 billion. “There’s another reason for this list to have shifted and that is the falling of prior darlings,” said Shaoul, whose fund beat 99 percent of competitors in the past year. “A lot of the ones which have fallen are energy and emerging-market related.”

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

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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