U.S. Stocks Decline After Rally as P&G, Amazon.com Drop

U.S. stocks fell, after the biggest four-day jump in a year for the Standard & Poor’s 500 Index, as declines in companies from Procter & Gamble Co. to Amazon.com Inc. (AMZN) overshadowed optimism about economic growth.

Procter & Gamble lost 1.7 percent after the world’s largest consumer-products maker cut its forecasts for profit and sales growth. Amazon.com slid 3.5 percent after UBS AG lowered the online retailer’s rating. Dow Chemical Co. fell 1 percent as an internal review concluded a breakup plan would reduce the company’s value. TripAdvisor Inc. jumped 7.2 percent as fourth-quarter revenue beat analysts’ estimates.

The S&P 500 fell less than 0.1 percent to 1,819.26 at 4 p.m. in New York, after gaining as much as 0.4 percent earlier in the day. The Dow Jones Industrial Average dropped 30.83 points, or 0.2 percent, to 15,963.94. About 6.4 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“We’re taking a breather here,” Phil Orlando, New York-based chief equity market strategist at Federated Investors Inc., which oversees about $376 billion, said in a phone interview. “Washington has essentially gotten out of the way, Yellen has told us monetary policy will be a continuation of what we’ve seen and we have a sense of what’s going to happen with the taper.”

The S&P 500 advanced 3.9 percent in the previous four days, the biggest gain for that stretch since January 2013. The benchmark gauge jumped 1.1 percent yesterday as comments by Federal Reserve Chair Janet Yellen fueled optimism the economy can weather further stimulus cuts.

‘Measured Steps’

Yellen, 67, delivering her first public remarks as Fed chair, said economic growth has strengthened and there is “broad improvement” in the labor market. She repeated the Fed’s outlook for further stimulus reductions in “measured steps,” adding that only a “notable change in the outlook” for the economy would prompt policy makers to slow the pace.

St. Louis Fed President James Bullard said today in New York that he expects economic expansion in 2014 of 3 percent or better. “Right now I think we’re on track” to continue tapering asset purchases and “will be able to move out of the program later this year,” he said.

Federal Open Market Committee officials have twice reduced the size of the monthly asset-purchase program, lowering bond buying to $65 billion in February from $85 billion last year. Three rounds of stimulus under previous Chairman Ben S. Bernanke have helped push the S&P 500 as much as 173 percent higher from a 12-year low in 2009.

China Growth

The benchmark gauge closed at a record on Jan. 15 and then dropped 5.8 percent through Feb. 3 on signs of slowing growth in China and a rout in emerging-market currencies. The recent rally has brought the index back to within 1.6 percent of its all-time high.

Data today showed China’s exports climbed in January. Overseas shipments rose 10.6 percent from a year earlier, the General Administration of Customs said today. That beat the median economist projection for a 0.1 percent gain. Imports advanced 10 percent, more than forecast, leaving a trade surplus of $31.9 billion, the widest for January since 2009.

“What you’re seeing here is the world returning to normal,” Patrick Spencer, head of equity sales at Robert W. Baird & Co. in London, said in a phone interview. “The Chinese economy has doubled in size in dollar terms since 2008. The opportunities for the rest of us remain simply staggering. Concerns about tapering will be offset by reassurances that zero-interest policies are here for the foreseeable future.”

Debt Ceiling

Equities extended gains yesterday as U.S. policy makers moved toward an agreement on the debt ceiling. After the market closed, the House of Representatives voted to suspend the debt limit until March 2015. The Senate cleared the measure today for President Barack Obama’s signature. Treasury Secretary Jacob J. Lew had said the nation’s ability to borrow may not last past Feb. 27 without an extension in the ceiling.

Since Republicans took control of the House in 2011, debates over the debt ceiling led to eleventh-hour showdowns that raised concerns that the government could default on its obligations, roiling financial markets. This time, lawmakers are sending a bill to Obama with about two weeks to spare.

A total of 14 companies in the S&P 500 were scheduled to post earnings today, including Cisco Systems Inc. and MetLife Inc. Almost 76 percent of those that have reported results this season have exceeded analysts’ profit estimates, data compiled by Bloomberg show.

Earnings Season

Earnings at S&P 500 companies rose by 8.3 percent in the fourth quarter of 2013 and sales by 2.7 percent, according to analyst estimates compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, fell 1.5 percent to 14.30 for its fifth day of declines, the longest stretch since July.

Six out of 10 main industries in the S&P 500 fell. Energy, raw-materials and consumer-staples shares had the biggest declines, losing more than 0.3 percent.

Procter & Gamble slid 1.7 percent, the most in the Dow, to $77.49. The company said core earnings per share excluding some items will increase 3 percent to 5 percent this year, down from a previous forecast of 5 percent to 7 percent, because of currency exchange-rate fluctuations and policy changes in Venezuela.

Amazon lost 3.5 percent to $349.25. UBS lowered the shares to neutral from a buy rating, meaning it no longer recommends acquiring the stock. The brokerage cited slowing sales growth in the fourth quarter and a potential risk to revenue from Amazon Prime customers.

Dow Review

Dow Chemical dropped 1 percent to $46.37. The largest U.S. chemical company, facing pressure from Dan Loeb’s Third Point LLC to split itself in two, said the review found that creating separate petrochemical and specialty-chemical businesses would negatively affect Dow’s “value proposition.” A breakup also wouldn’t improve productivity or capital allocation, Dow said.

Intuit Inc. slipped 4.1 percent to $69.72. Evercore Partners Inc. analyst David Togut cut the stock’s rating to underweight from equal weight and lowered his price target to $62 a share from $72 after a consumer tax survey showed respondents may shift from tax software use.

TurboTax (INTU) unit volumes may be flat to down 1 percent, versus a 4 percent gain in 2013, Togut said. He lowered his estimate for consumer tax revenue growth to 0.5 percent this year from 4.5 percent.

Lorillard, LinkedIn

Lorillard Inc. erased 5 percent, the most in the S&P 500, to $47.47. The cigarette manufacturer reported fourth-quarter earnings and revenue excluding excise taxes that missed analysts’ forecasts.

LinkedIn Corp. (LNKD) dropped 5.2 percent to $192.34, the lowest level since July. Shares of the professional-networking site have plummeted 14 percent since Feb. 6, when LinkedIn forecast first-quarter sales that fell short of analysts’ estimates as growth slows in all three of its businesses.

FireEye Inc. (FEYE) retreated 11 percent to $69.08. The technology company forecast a first-quarter adjusted loss of between 51 cents a share and 56 cents, compared with the average analyst call for a loss of 37 cents. FireEye’s revenue forecast also missed projections.

TripAdvisor, Fossil

Technology, phone and industrial companies gained the most among 10 groups in the S&P 500. Caterpillar Inc. (CAT) jumped 1.3 percent to $96.17, the highest level in a year, for the biggest gain in the Dow.

TripAdvisor jumped 7.2 percent to a record $90.27. The online trip booking service reported fourth-quarter revenue of $212.7 million, topping analysts’ estimates of $205.6 million.

Fossil Group Inc. added 3.5 percent to $121.06. The fashion accessories designer reported fourth-quarter earnings that beat its own forecast for the period.

Cliffs Natural Resources Inc gained 2.3 percent to $21.99. The U.S. iron-ore producer said yesterday it would stop operations at its Wabush mine in Newfoundland and Labrador by the end of the first quarter because of “unsustainably high” costs.

Casablanca Capital LP, Cliffs’ fourth-largest shareholder according to data compiled by Bloomberg, has called for the company to double its dividend, convert its U.S. assets to a master-limited partnership and significantly cut costs. Cliffs has advanced 17 percent since Feb. 4.

Trimble Navigation Ltd. (TRMB) rose 14 percent to $37.19, an all-time high. The measurement-instruments company said adjusted profit was 43 cents a share in the fourth quarter, more than analysts’ projections of 37 cents.

To contact the reporters on this story: Callie Bost in New York at cbost2@bloomberg.net; Jeff Sutherland in New York at jsutherlan13@bloomberg.net

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

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