U.S. stocks fell, ending the Standard & Poor’s 500 Index’s five-day winning streak, as a Moody’s Investors Service downgrade of Portuguese debt rekindled concern the economy will slow and offset gains by energy producers.
Bank of America Corp., the biggest U.S. lender, and General Electric Co. lost 0.8 percent as shares of financial and industrial companies led losses in the S&P 500. A gauge of banks dropped the most in the S&P 500 within 24 groups, falling 1.2 percent, as Citigroup Inc. said 2012 industry earnings estimates may be too high. Energy companies in the S&P 500 advanced 0.5 percent, the most among 10 groups.
The S&P 500 slumped 0.1 percent to 1,337.88 at 4 p.m. in New York. The intraday move in the S&P 500 between its high and low was 0.5 percent, the smallest move since April 29, when the index peaked for the year. The benchmark equity index rose 5.6 percent last week, the biggest rally since July 2009. The Dow Jones Industrial Average fell 12.90 points, or 0.1 percent, to 12,569.87 today.
“The market is correcting a little bit after a strong run last week, using the headline about Portugal’s debt rating as a catalyst,” said Tom Mangan, who helps oversee $2.7 billion at James Investment Research Inc. in Xenia, Ohio. “Portugal’s economy has virtually no impact on U.S. markets, but the question is whether this is the continuation of a problem that began in Greece. It raises fear of a contagion effect in the market.”
The S&P 500 fell 1.8 percent in June, spurring the first quarterly loss in a year, on concern that Greece will fail to repay all of its debt and that the U.S. economy will weaken further. Even so, the index has gained 6.4 percent in 2011 as government stimulus measures and higher-than-estimated corporate earnings lifted investors’ confidence.
Stocks reversed gains after Portugal’s long-term government bond ratings were cut to Ba2, or junk, from Baa1 by Moody’s, making it the second euro-region country with a non-investment-grade ranking.
Equities declined earlier as the Commerce Department said orders placed with U.S. factories increased 0.8 percent in May, while economists projected a 1 percent increase, according to the median forecast in a Bloomberg survey.
An unexpected pickup in American manufacturing growth helped ease concern last week that the world’s largest economy is faltering, sending benchmark indexes to their highest levels since May and their biggest weekly gains in two years. Alcoa Inc., the largest U.S. aluminum producer, will become the first Dow company to report second-quarter earnings on July 11.
The “earnings season is right around the very close corner,” said Richard Sichel, who oversees $1.6 billion as chief investment officer at Philadelphia Trust Co. “The past number of quarters it’s definitely helped the market with surprises on the upside, and we could see more of that.”
Bank of America lost 0.8 percent to $11 as financial stocks in the S&P 500 slumped 0.8 percent, the most among 10 industries. The KBW Bank Index retreated 1.2 percent as 22 of its 24 stocks retreated. Wells Fargo & Co., the largest U.S. home lender, dropped 0.9 percent to $28.42. Regions Financial Corp. slid 2.1 percent to $6.17.
“We believe that a prolonged low rate environment is consistent with weak earning asset growth,” Keith Horowitz, an analyst at Citigroup, wrote in a note to clients today. “While we believe the large regional banks in our universe should report 2Q results largely in line with consensus, we do see significant downside to 2012/2013.”
GE, the world’s biggest maker of jet engines, power-generation equipment, medical imaging machines and locomotives, slipped 0.8 percent to $19.04. A gauge of industrial companies lost 0.6 percent, the second-most within 10 groups in the S&P 500.
Energy shares climbed as crude oil jumped 2.1 percent to a three-week high of $96.89 a barrel after European finance ministers approved an 8.7 billion-euro ($12.6 billion) aid payment to Greece on July 2. Marathon Oil gained 3.4 percent to $34.07 and Peabody Energy advanced 2.2 percent to $60.69. Chevron Corp., the second-biggest U.S. energy company, rose the most in the Dow, adding 1 percent to $105.12.
The S&P 500 Insurance Index of 22 stocks slumped 1.1 percent, the second-biggest decline in the S&P 500 among 24 groups. MetLife Inc. lost 1.5 percent to $43.72, while Genworth Financial Inc. decreased 2.7 percent to $10.28.
MetLife and Genworth Financial units are among nine companies subpoenaed last month as part of New York Attorney General Eric Schneiderman’s probe of the life insurance industry’s handling of so-called abandoned property, a person familiar with the matter said.
The probe is seeking to determine whether the companies do enough to determine whether someone has died and benefits are due, the person said. About 35 other states are looking into whether the insurance industry is adequately handling abandoned property such as unclaimed life-insurance proceeds.
Google Inc., the world’s largest Internet-search company, rose 2.2 percent to $532.44. The shares were raised to “overweight” from “equal weight” at Evercore Partners, which said they may reach $670 as the company grows in social media and other product initiatives.
SanDisk Corp. climbed 1.5 percent to $43.45. Deutsche Bank AG analysts Bob Gujavarty and Ross Seymore raised their recommendation to “buy” from “hold,” saying profit margins will become “far more sustainable.”
General Motors Co. gained 0.9 percent to $30.86. The biggest overseas automaker in China said its June sales rose in the country, reversing a two-month decline, as customers bought more Buick and Chevrolet passenger cars.