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U.S. Stocks Pare Losses on Optimism Greece to Back Austerity

U.S. Stock Futures Fall on Retail Sales Data
Traders on the floor of the New York Stock Exchange. Photographer: Scott Eells/Bloomberg

Most U.S. stocks retreated as an advance in the final half hour spurred by optimism that Greece will commit to budget cuts stopped short of erasing a decline in the Standard & Poor’s 500 Index.

Bank of America Corp. slid 3.3 percent as Citigroup Inc. cut its recommendation. Yahoo! Inc. slumped 4.7 percent as talks on an Asia asset swap are said to have stalled. Masco Corp. tumbled 12 percent after the home improvement and building products maker reported a wider-than-projected loss. Boeing Co. added 1 percent after signing a 230-aircraft order worth $22.4 billion, setting a record for the planemaker.

The S&P 500 decreased 0.1 percent to 1,350.50 at 4 p.m. New York time, trimming an earlier decline of as much as 0.8 percent. The Dow Jones Industrial Average rose 4.24 points, or less than 0.1 percent, to 12,878.28 today. Almost two stocks declined for each that rose on U.S. exchanges.

“To say that Greece doesn’t matter is probably short-sighted,” David Goerz, chief investment officer at Highmark Capital Management Inc., said in a phone interview from San Francisco. His firm oversees $17 billion. “There’s a lot of skepticism on whether Greece will be successful. They are trying to make it work.”

Equities fell earlier today as European finance ministers canceled a meeting scheduled for tomorrow. After Luxembourg Prime Minister Jean-Claude Juncker canceled the gathering, citing the lack of political assurances from Greek leaders to stick to austerity pledges, a government official in Athens said the leaders of Greece’s two biggest political parties, New Democracy’s Antonis Samaras and Pasok’s George Papandreou, will provide the written commitments demanded.

Economic Data

A report showing that sales at U.S. retailers rose less than forecast in January also drove earlier losses. The 0.4 percent gain reported by the Commerce Department today in Washington was half the 0.8 percent median forecast of economists surveyed by Bloomberg News.

Today’s decline came after the S&P 500 closed less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The index has risen 7.4 percent this year as the U.S. economy showed signs of accelerating and European leaders moved closer to a solution on the region’s debt crisis.

“You’ve had a significant run-up in the market and you haven’t really had any significant pullback,” Paul Simon, chief investment officer at Tactical Allocation Group LLC in Birmingham, Michigan, said in a phone interview. His firm oversees $1.6 billion. “We approached the highs of 2011 and that’s going to be a resistance in the very, very short term.”

Banks Drop

The KBW Bank Index fell 1.3 percent as 21 of its 24 stocks retreated. Bank of America lost 3.3 percent, the biggest decline in the Dow, to $7.98. The stock fell after Keith Horowitz, an analyst at Citigroup, cut its rating to “neutral,” meaning he believes there aren’t enough reasons to take a positive or negative view on the stock. His previous rating was “buy.”

The recent rally in shares reflects “capital concerns subsiding, but earnings headwinds persist,” analyst Horowitz wrote in a note today.

Yahoo slumped 4.7 percent to $15.37. Representatives of Alibaba and Softbank Corp., co-owner of Yahoo Japan Corp., are prepared to approach Yahoo Chief Executive Officer Scott Thompson to explore another arrangement that would let companies buy back their stakes, said a person briefed on the matter. Dana Lengkeek, a spokeswoman for Yahoo, didn’t immediately return a phone message seeking comment.

Masco, Goodyear

Masco dropped 12 percent, the most in the S&P 500, to $11.63. It reported a fourth-quarter loss from continuing operations of 9 cents a share, wider than the average analyst estimate of a loss of 2 cents.

Goodyear Tire & Rubber Co. sank 5.2 percent to $13.25 after reporting fourth-quarter profit that was less than analysts’ estimates as the number of tires sold declined 5 percent.

First Solar Inc. fell 6 percent to $39.21. The maker of thin-film solar panels may “have the most near term downside risk” under a German proposal to cut subsidies that is likely to be “worse than expected,” Deutsche Bank AG said in a note.

Boeing gained 1 percent, the second biggest advance in the Dow, to $75.56. The accord with Indonesian budget carrier PT Lion Mentari Airlines today at the Singapore Airshow, which solidifies a provisional agreement last year, includes 201 orders for the in-development 737 MAX and 29 for the extended range 737-900.

Cutting Jobs

Avon Products Inc. climbed 1.5 percent to $17.80. The door-to-door cosmetics seller conducting an internal bribery probe said it will cut jobs and identify other ways to reduce costs.

Apple Inc. rose 1.4 percent to $509.46, gaining for an eighth day. That’s the longest winning streak since July 26. The largest technology company yesterday surpassed $500 for the first time.

Dividend-paying stocks are still a “winning theme” for investors even though they have gotten off to a relatively slow start this year, according to Gina Martin Adams, a strategist at Wells Fargo Securities LLC.

While the Standard & Poor’s 500 Dividend Aristocrats Index rose 4.2 percent for the year through yesterday, the gain was 2.6 percentage points smaller than the S&P 500’s advance. By contrast, the indicator fared better than the S&P 500 in the past two years, its first back-to-back wins since 2002. The index is comprised of companies that have raised payouts for at least 25 consecutive years, relative to the S&P 500.

Payout ratios suggest companies can distribute plenty more money to shareholders, Martin Adams wrote yesterday in a report. She noted that dividends equal 27 percent of S&P 500 earnings, the lowest figure in more than a century, according to data compiled by Yale University Professor Robert Shiller.

“Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend-paying stocks,” the report said.

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