U.S. stocks fell, snapping a five-week-rally for the Standard & Poor’s 500 Index, on concern that plans to help Greece avoid default were unraveling and as confidence among American consumers dropped more than forecast.
Citigroup Inc. and Bank of America Corp. retreated more than 1.3 percent to pace declines among financial companies. Commodity producers slumped as Freeport-McMoRan Copper & Gold Inc., Alcoa Inc. and Halliburton Co. decreased at least 1.9 percent. First Solar Inc., the biggest maker of thin-film solar panels, tumbled 10 percent after permitting issues delayed a U.S. loan guarantee for a power plant in California.
The S&P 500 declined 0.7 percent to 1,342.64 as of 4 p.m. New York time, the most since Dec. 28. The benchmark gauge has fallen 0.2 percent since Feb. 3, snapping the longest weekly rally since January 2011. The Dow Jones Industrial Average decreased 89.23 points, or 0.7 percent, to 12,801.23 today.
“We’ve had a flip-flop that triggered global selling,” Frederic Dickson, who helps oversee $28 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Investors are responding to the sudden change in direction or the lack of resolution of the Greek/European problem that they felt was resolved.”
Global equities tumbled after George Karatzaferis, who heads one of the three parties supporting interim Prime Minister Lucas Papademos, said he wouldn’t support austerity measures worked out for a rescue. He spoke hours after German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece was missing deficit targets. S&P downgraded 34 Italian banks after reducing the nation’s grade last month.
Stocks extended losses as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 72.5 from 75 in January. The median estimate in a Bloomberg News survey called for 74.8. The gauge averaged 89 in the five years leading to the 18-month recession that ended in June 2009.
Today’s slump followed a three-day rally that yesterday put the S&P 500 less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The benchmark gauge is up 6.8 percent this year as companies reported earnings that beat analysts’ estimates while better-than-expected data on manufacturing and employment bolstered optimism about the world’s largest economy.
The Morgan Stanley Cyclical Index dropped 1.2 percent amid concern about global economic growth. The Dow Jones Transportation Average lost 1 percent. All 10 groups in the S&P 500 fell as commodity, financial and industrial shares had the biggest declines.
The KBW Bank Index slid 1.3 percent as all of its 24 stocks retreated. Citigroup sank 2.2 percent to $32.93. Bank of America lost 1.3 percent to $8.07.
Concern that Europe’s debt crisis may curb global economic growth also drove energy and raw material producers lower. Copper shipments to China fell in January, the first drop in eight months, while inventories monitored by the Shanghai Futures Exchange advanced for the ninth straight week to a record.
Freeport-McMoRan, the world’s largest publicly traded copper producer, sank 3.2 percent to $44.94. Alcoa erased 3.3 percent to $10.29. Halliburton fell 1.9 percent to $36.06.
First Solar tumbled 10 percent, the most in the S&P 500, to $43.91. Exelon Corp. purchased the 230-megawatt Antelope Valley Solar Ranch One for $75 million in September, and the Tempe, Arizona-based solar company will have to buy it back if the project cannot win final construction permits and qualify for the $646 million U.S. Energy Department loan guarantee, First Solar said yesterday in a regulatory filing.
“First Solar will not be able to recognize revenues from AVSR construction unless a sale is completed and funded,” Dan Ries, an analyst at Collins Stewart, said today in a note to clients. He reduced his rating to “neutral” from “buy.”
Apollo Global Management LLC dropped 6.1 percent to $14.40. The private equity firm that went public last year said fourth-quarter profit fell 66 percent as market swings hurt its private equity holdings.
NYSE Euronext rose 4.5 percent, the biggest gain in the S&P 500, to $28.94. Excluding some items, fourth-quarter earnings were 50 cents a share, beating the 48-cent average estimate of 16 analysts surveyed by Bloomberg. The operator of the New York Stock Exchange is preparing to discuss its standalone strategy with shareholders after being blocked last week from merging with Deutsche Boerse AG.
LinkedIn Corp. surged 18 percent to $89.96. The biggest professional-networking website reported quarterly sales that more than doubled and forecast higher 2012 revenue, buoyed by advertising and subscriptions.
BlackRock Inc.’s Laurence D. Fink, who urged investors this week to put all their money in equities, said his call was aimed at getting cash back into the capital markets.
“It’s important to get cash off the sidelines and back into the markets so people can get the returns they need and we can get our economies moving again,” Fink, chief executive officer of the world’s largest asset-management firm, told BlackRock employees in Beijing yesterday. “Obviously, everyone needs a portfolio tailored to their risk-tolerance and goals; one size doesn’t fit all,” Fink said, according to a transcript of the comments obtained by Bloomberg News.
Comments by Fink that yields from traditional bonds are too low to provide meaningful returns for investors have been echoed by billionaire investor Warren Buffett, who said yesterday that bonds are among the “most dangerous of assets.” The Federal Reserve has kept borrowing costs near zero, and said last month that economic conditions may warrant “exceptionally low” interest rates through 2014.
“Too many people are underweight equities, and one of things I’m trying to do is to get people to think about the opportunities they’re missing, with valuations at these levels,” Fink said in Beijing.