U.S. Stocks Fall, Led by UnitedHealth, EBay on Earnings

April 18 (Bloomberg) -- Bloomberg’s Trish Regan, Adam Johnson and Matt Miller report on today’s ten most important stocks including IBM, Microsoft and Google. (Source: Bloomberg)

U.S. stocks fell, sending the Standard & Poor’s 500 Index to a six-week low, as earnings from UnitedHealth Group Inc. (UNH) to EBay Inc. (EBAY) disappointed investors.

UnitedHealth (UNH) slumped 3.8 percent, the most in three months. EBay slid 5.9 percent after reporting revenue that missed some estimates. Morgan Stanley lost 5.4 percent after posting the biggest drop in trading revenue among the largest U.S. banks. Verizon Communications Inc. (VZ) gained 2.8 percent as growth in wireless customers helped profit beat estimates, while PepsiCo Inc. (PEP) added 3 percent after snack sales increased.

The S&P 500 fell 0.7 percent to 1,541.61 today, the lowest level since March 6. The Dow Jones Industrial Average (INDU) slipped 81.45 points, or 0.6 percent to 14,537.14. The Nasdaq Composite Index dropped 1.2 percent for the biggest two-day slump in five months.

“We’ve come to a period of negative economic surprises,” Mark Luschini, the chief investment strategist at Janey Montgomery Scott LLC, which manages $55 billion, said in a phone interview. “Whether it’s a pullback or a corrective phase, I think it’ll just be a pause because I don’t think the fundamental underpinnings are deteriorating more.”

Stocks kept losses after a measure of manufacturing in the Philadelphia region expanded at a slower pace and the index of U.S. leading indicators unexpectedly declined for the first time in seven months. The S&P 500 fell below its 50-day moving average for the first time this year. That level, currently at around 1,543, is watched by some analysts to gauge the trend of the market.

Earnings Season

The S&P 500 (SPX) has dropped 3.3 percent since reaching an all- time high of 1,593.37 on April 11, as China’s economic growth unexpectedly slowed, commodities tumbled and data on U.S. employment and retail sales missed forecasts.

Of the 82 companies in the index that have reported earnings since the season began, 74 percent have beaten analysts’ estimates for profit and 49 percent have exceeded sales forecasts, according to data compiled by Bloomberg. Analysts project first-quarter results dropped 1.4 percent, the first contraction since 2009.

Seven of the 10 main S&P 500 industries declined today as technology, health-care and consumer-discretionary companies fell the most, sinking at least 1.1 percent.

The Chicago Board Options Exchange Volatility Index (VOL), or VIX, increased 6.4 percent to 17.56. The gauge briefly erased losses for the year after climbing as much as 10 percent today. The VIX, which moves in the opposite direction to the S&P 500 about 80 percent of the time, reached a six-year low in March and has since risen 55 percent.

IBM Miss

International Business Machines Corp. (IBM) slumped 3.6 percent to $199.61 in trading after the close of exchanges today. The largest technology-services provider posted first-quarter profit that missed analyst estimates as hardware sales slowed. The Armonk, New York-based company hasn’t missed earnings projections since 2005, data compiled by Bloomberg show.

“When we were heading into this earnings season, the estimates had come down, but the S&P itself was still in a situation where sentiment was high and correcting,” Sam Turner, a fund manager with Richmond, Virginia-based Riverfront Investment Group LLC, said in the phone interview. His firm manages $3.7 billion. “That can play itself out with a consolidation.”

UnitedHealth dropped 3.8 percent to $59.69. The biggest U.S. health insurer reported higher costs for patients on Medicare, the U.S.-funded program for the elderly, and trimmed its full-year revenue forecast by about $2 billion because a private employer converted to a less-profitable contract.

Humana Inc., the second-largest Medicare insurer, slipped 3.1 percent to $72.21. Health-care companies in the S&P 500 fell 1.2 percent as a group.

‘C Plus’

EBay slumped 5.9 percent to $52.82. The operator of the largest Internet marketplace said first-quarter sales amounted to $3.75 billion, missing the average analyst estimate. Second- quarter revenue will be $3.8 billion to $3.9 billion, lower than the average projection for $3.95 billion, the company said.

“The market was more ripe for hiccups and we’re seeing it,” David Sowerby, who helps oversee about $185 billion at Loomis Sayles & Co. in Bloomfield Hills, Michigan, said by phone. “We had a long run. Sentiment got more bearish and the earnings season has been a series of C plus.”

The Nasdaq Composite Index tumbled to the lowest level since February. SanDisk Corp., a maker of flash memory for mobile devices, fell 6.6 percent to $52.02. The company said it isn’t increasing spending on new plants and equipment and doesn’t expect enough output to meet all of the orders it receives this year.

Apple Retreats

Apple Inc. (AAPL) dropped 2.7 percent to a 16-month low of $392.05. The stock has slumped 26 percent this year, underscoring concern among investors about Chief Executive Officer Tim Cook’s plans for future products in an industry crowded with rivals such as Samsung Electronics Co., Google Inc. and Amazon.com Inc.

Morgan Stanley fell 5.4 percent to $20.31. Bond-trading revenue plunged 42 percent in the first quarter and stock- trading revenue declined 19 percent, the company said.

Bank of America Corp. dropped 2.2 percent to $11.44, extending a 4.7 slump from yesterday, when the lender reported profit that missed analysts’ projections.

Philip Morris (PM) International Inc. slipped 2.5 percent to $91.69. The world’s largest publicly traded tobacco company posted earnings that fell more than analysts estimated as tax increases and economic weakness hurt shipments.

Verizon, PepsiCo

Verizon climbed 2.8 percent to $50.91. The second-largest U.S. phone company exceeded analysts’ profit estimates after attracting more wireless customers and getting them to sign up for lucrative data contracts.

PepsiCo (PEP) jumped 3 percent to a record $81.25. The world’s largest snack-food maker posted earnings that beat the average analyst estimate after global snack sales increased.

Union Pacific Corp. advanced 4 percent to $142.46, an all- time high. The biggest U.S. railroad reported profit that topped analysts’ estimates as higher pricing overpowered a decline in cargoes.

Peabody Energy Corp. rallied 7.6 percent, the most in the S&P 500, to $20.46. The largest U.S. coal company reported a loss that was narrower than expected as U.S. demand for coal used to make electricity rose.

American Express Co. added 1.4 percent to $65.04. The biggest U.S. credit-card issuer by customer spending reported profit that exceeded analysts’ estimates as consumers boosted purchases.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net

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

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