The Ibovespa declined for a second straight day as homebuilder PDG Realty SA paced losses among companies that depend on domestic demand after economists covering Brazil cut their growth forecasts.
Duratex SA, a producer of wood panels and bathroom fixtures, fell to its lowest since 2012 after JPMorgan Chase & Co. lowered its recommendation to the equivalent of sell. CPFL Energia SA sank after saying shareholder Bonaire Participacoes SA hired JPMorgan to sell a stake in the company.
The Ibovespa declined 0.3 percent to 54,629.55 at the close of trading in Sao Paulo, with 44 stocks lower and 27 higher. The real retreated 0.6 percent to 2.2374 per dollar at 5:28 p.m. local time. Economists covering Brazil cut their 2014 median growth forecast to 1.24 percent from 1.44 percent a week earlier, according to a central bank survey published today.
“The trend is still negative for companies that depend on domestic consumption as economic activity is still weak,” Alvaro Bandeira, a partner at Orama Asset Management, said in a phone interview from Rio de Janeiro.
President Dilma Rousseff is struggling against accelerating inflation and slowing consumption before October’s election. Both retail sales and industrial output contracted in April after economic growth moderated in the first quarter.
PDG slumped 3.7 percent to 1.58 reais. Retailer Cia. Hering fell 1.6 percent to 22.97 reais.
Duratex lost 2.2 percent to 9.01 reais. The company’s profit margin will probably decline further as the Brazilian economy weakens, JPMorgan analysts including Lucas Ferreira wrote in a research note to clients.
“We believe the shares should continue to underperform and we see no triggers for an outperformance in the short term,” they wrote.
The Ibovespa entered a bull market on May 7, surging 20 percent from this year’s low, as Petroleo Brasileiro SA rallied on speculation a change in government will reduce intervention in state-run companies.