U.S. stocks retreated, trimming a weekly advance for the Standard & Poor’s 500 Index, amid concern that a rally that drove the benchmark gauge to the highest level since 2008 has outpaced global economic growth prospects.
Energy, industrial and financial shares had the biggest declines among 10 groups in the S&P 500. Anadarko Petroleum Corp., Cummins Inc. and Morgan Stanley slid more than 1.6 percent to pace losses among the largest companies. Big Lots Inc. fell 4 percent as sales missed estimates. Yelp Inc., the site that lets users review everything from diners to dentists, gained as much as 73 percent in its first day of trading.
The S&P 500 fell 0.3 percent to 1,369.63 at 4 p.m. New York time. It rose 0.3 percent since Feb. 24 for a third weekly gain. The Dow Jones Industrial Average slid 2.73 points, or less than 0.1 percent, to 12,977.57. The Russell 2000 Index lost 1.6 percent to 802.42, the lowest since Jan. 31. The gauge dropped 3 percent this week. About 6 billion shares changed hands on U.S. exchanges, or 9.9 percent below the three-month average.
“Some people may think that the market is a bit ahead of itself after the rally in stocks,” said John Carey, a Boston-based money manager at Pioneer Investments. His firm oversees about $220 billion. “There’s concern about a potential slowdown as a result of Europe’s debt crisis. People seem to have been more relaxed about the situation in Europe, but when you look closely, you see that the underlying issues remain unresolved.”
Stocks followed a euro slump as Spain raised its budget-deficit target for 2012 and German retail sales unexpectedly declined. Treasuries gained for the first time in four days, while the S&P GSCI gauge of 24 commodities fell 1.2 percent.
Today’s drop came as the S&P 500 capped its best start to a year since 1991 on better-than-estimated economic data and expectations Europe would tame its crisis. It trades at 14.1 times reported earnings, which is the highest since August while still below the average since 1954 of 16.4 times, according to data compiled by Bloomberg. Earlier this week, the Dow closed above 13,000 for the first time since 2008 and the Nasdaq Composite Index topped 3,000 for the first time since 2000.
“There’s a whole too far, too fast thing,” Rick Fier, director of equity trading at Conifer Securities LLC in New York, said in a telephone interview. His firm oversees more than $12 billion. “We don’t think that means it’s going to have a huge pullback, but a consolidation would be a relief.”
Seven out of 10 groups in the S&P 500 declined. Anadarko Petroleum fell 3.8 percent to $82.55, pacing losses in energy shares, as oil tumbled after yesterday topping $110 a barrel. Cummins decreased 1.8 percent to $119.46. Morgan Stanley retreated 1.7 percent to $18.87.
Big Lots slid 4 percent to $42.71 after reporting fourth-quarter sales of $1.63 billion. On average, analysts surveyed by Bloomberg estimated $1.66 billion.
Travelers Cos. lost 0.7 percent to $58.01. The only insurer in the Dow Jones Industrial Average was downgraded to “equal weight” at Morgan Stanley. That means the stock’s total return is expected to be in line with the average for its industry peers over the next 12 to 18 months. The previous rating was “overweight.”
Overstock.com Inc. slumped 11 percent to $6.11. The online discount retailer reported fourth-quarter sales of $314.1 million, trailing the average estimate of $377.5 million from two analysts in a Bloomberg survey.
Yelp climbed 64 percent to $24.58. The San Francisco-based company raised $107.3 million in the IPO, pricing the shares at $15 each, according to a statement yesterday. The company earlier offered them for $12 to $14.
Facebook Inc. hired Deutsche Bank AG, Credit Suisse Group AG and Citigroup Inc. to work on its $5 billion initial public offering, bringing the total of banks on the deal to nine, said a person with direct knowledge of the situation.
Facebook’s new and existing banks will grant the company an additional credit line of more than $2.5 billion, said the same person, who declined to be identified as the decision isn’t public. The moves will be disclosed in a new regulatory filing in a couple of weeks, said the person.
Sara Lee Corp. added 7.1 percent to $21.83. Its international coffee company, which includes the Douwe Egberts, Senseo and Moccona brands, filed for a spinoff under the name DE International Holdings NV.
Wynn Resorts Ltd. jumped 4.3 percent to $127.27, as the stock resumed trading following an hour-and-a-half halt. The Las Vegas-based operator of its namesake and Encore casinos retracted a regulatory filing that suggested the company had completed a land concession contract on its proposed resort and casino in the Cotai area of Macau.
Shutterfly Inc. surged 17 percent to $31.36 after announcing an initial offer to buy Eastman Kodak Co.’s online-picture business for $23.8 million. Kodak, the photography pioneer that filed for bankruptcy protection in January, agreed to the so-called stalking horse bid in a court-supervised auction process, according to a statement yesterday.
Price swings in the S&P 500 have become more muted this year, making investors complacent about the outlook for stocks, according to Canadian brokerage firm Brockhouse & Cooper Inc.
There have been no daily swings of 2 percent or more in either direction this year, compared with more than 25 occurrences in the second half of 2011, when Europe’s sovereign-debt crisis triggered a drop in equities. The lower chart panel tracks the Chicago Board Options Exchange Volatility Index, or VIX, known as the market’s “fear gauge.”
“Volatility tends to come with negative surprises, and it’s been quiet since December,” said Pierre Lapointe, a strategist at the Montreal-based brokerage. “But quiet periods usually don’t last. There is a risk of complacency. This is a low volatility environment and investors shouldn’t think this is the new norm.”