U.S. Stocks Decline as Energy Slumps, Investors Await Fed

Aug. 19 (Bloomberg) -- Bloomberg’s Adam Johnson, Sara Eisen and Matt Miller report on today’s ten most important stocks, including Trulia, Saks and Intel. (Source: Bloomberg)

U.S. stocks fell, giving the Standard & Poor’s 500 Index its first four-day decline of the year, after energy shares dropped and Treasury yields jumped to a two-year high as investors awaited signals this week on the Federal Reserve’s stimulus plans.

Apache Corp. (APA) tumbled 4.6 percent, leading energy stocks to the biggest decline among 10 groups in the S&P 500 as crude prices fell. Exxon Mobil Corp. (XOM) dropped for the 18th time in 19 days. Intel Corp. gained 1.7 percent after Piper Jaffray Cos. raised its rating on the shares. Edwards Group (EVAC) Ltd. surged 18 percent after Atlas Copco AB agreed to buy the company for $1.2 billion.

The S&P 500 dropped 0.6 percent to 1,646.06 at 4 p.m. in New York, the lowest level since July 8. The Dow Jones Industrial Average slipped 70.73 points, or 0.5 percent, to 15,010.74. About 5.3 billion shares exchanged hands on U.S. exchanges today, 16 percent below the three-month average. The benchmark 10-year yield jumped to 2.88 percent.

“We are still in that dead zone where there is a void of catalysts -- no Fed, no earnings, summer holidays, etc.,” Jeff Saut, the St. Petersburg, Florida-based chief investment strategist at Raymond James & Associates, wrote in a note to investors today. He helps oversee about $400 billion “I think rallies are for selling on a trading basis, but remain quite bullish on the longer-term.”

The S&P 500 declined 2.1 percent last week and the Dow average lost 2.2 percent, the largest weekly drop in 14 months, amid speculation the Fed will pare its bond-purchase program as the economy recovers.

The Federal Open Market Committee will release minutes of its July 30-31 meeting on Aug. 21. Investors and analysts will be looking for clues on when central bankers plan to reduce their $85 billion in monthly asset purchases. Officials will begin to trim buying at their Sept. 17-18 meeting, according to 65 percent of economists surveyed by Bloomberg on Aug. 9-13.

Jackson Hole

Central bankers and policy makers meet in Jackson Hole, Wyoming, from Aug. 22 to Aug. 24 to discuss the global economy and monetary policy.

Fed stimulus helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. Benchmark indexes reached record highs on Aug. 2. The S&P 500 has dropped 3.7 percent since then, and is trading below its average price over the past 50 days.

Some 41 S&P 500 stocks had their 14-day relative-strength index below 30 at the end of last week, the most since Nov. 16, Bloomberg data show. RSI measures the degree to which gains and losses outpace each other and some analysts who watch charts to predict market moves consider a reading lower than 30 as indicating the stock has fallen too far too fast.

Earnings Season

Of the 464 companies in the S&P 500 that have reported earnings so far, 72 percent have topped analysts’ estimates, according to data compiled by Bloomberg. About 55 percent have exceeded revenue projections. About 23 S&P 500 companies are scheduled to release quarterly results this week.

“This is the difficult period of a rest area for the market, which is the time right after earnings and just before some major policy debates,” Chris Hyzy, who helps oversee about $325 billion as chief investment officer of U.S. Trust, said in a phone interview.

The Chicago Board Options Exchange Volatility Index, or VIX, climbed 5.1 percent today to 15.10. While the gauge has advanced 28 percent since a low on Aug. 5, it remains 16 percent lower for the year.

Energy Tumbles

Energy shares had the largest decline today, dropping 1.5 percent. West Texas Intermediate crude dropped for the first time in seven days as the threat of a storm in the Gulf of Mexico dissipated, removing a risk to oil and gas production in the area. Oil also slid because demand from U.S. refineries is declining as the peak gasoline-use period comes to an end. WTI capped the longest rising streak since April on Aug. 16 amid unrest in Egypt.

Apache fell 4.6 percent to $75.37, leading declines in energy stocks. The company extended a five-day tumble as Stifel Nicolaus & Co. cut its rating on the shares to a hold from buy.

Exxon Mobil lost 1.1 percent to $86.92. The biggest energy company by market value has tumbled 8.7 percent since July 23, when it reached a record high.

Marathon Oil Corp. slumped 4.3 percent to $32.61, the lowest since May. Valero Energy Corp. declined 2.7 percent to $34.47.

Cobalt International Energy Inc. (CIE) fell 15 percent to $24.90 after the oil exploration company said it found no commercial hydrocarbons in its Ardennes well in the Gulf of Mexico.

Financial shares tumbled 1.3 percent. Genworth Financial Inc. fell 4.5 percent to $12.02. Invesco Ltd. lost 1.9 percent to $31.20.

JPMorgan Slides

JPMorgan Chase & Co. slid 2.7 percent to $51.83. The U.S. Securities and Exchange Commission’s anti-bribery unit is investigating whether the bank hired the children of Chinese officials to help its business, The New York Times reported.

Zillow Inc. lost 7.1 percent to $84.74. The operator of the largest real-estate information website agreed to acquire StreetEasy for $50 million in cash to expand its coverage of the New York housing market.

Intel gained 1.7 percent to $22.28. Piper Jaffray changed its rating on the shares to neutral from underweight and raised its price target to $22 from $20.

Apple Inc. (AAPL) rose 1.1 percent to $507.74. The shares have gained 12 percent in the last six trading days. Billionaire Carl Icahn said Aug. 13 that he had acquired a large position in the company. The maker of iPads and iPhone has pared its decline from an all-time high in September to 28 percent.

Health Stocks

Health-care companies rose 0.2 percent for the only advance among 10 S&P 500 groups as a group. Intuitive Surgical Inc. gained 1.8 percent to $384.95. Gilead Sciences Inc. increased 0.8 percent to $57.34.

Edwards Group soared 18 percent to $10 after Atlas Copco, the world’s largest maker of air compressors, agreed to pay $1.2 billion for the British vacuum-pump maker. Shareholders of the Crawley, England-based company will receive as much as $10.50 a share depending on financial results for this year, Atlas Copco said in a statement today.

Dollar General Corp. (DG) gained 3.1 percent to $54.09 as JPMorgan changed its rating on the shares to the equivalent of a buy from hold. The firm increased its target price to $64 from $51.

To contact the reporters on this story: Alex Barinka in New York at abarinka2@bloomberg.net; Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.