U.S. Stocks Drop as Energy Shares Retreat the Most Since January

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U.S. stocks declined, after the biggest rally in two months, as Noble Energy Inc. led energy shares to their biggest drop since January.

Noble Energy lost 6.2 percent after agreeing to buy Rosetta Resources Inc. for $2.1 billion. Rosetta jumped 27 percent. Exxon Mobil Corp. and Chevron Corp fell more than 1.1 percent as oil prices slipped. Actavis Plc rose 3.1 percent after better-than-estimated first-quarter earnings. Dean Foods Co. added 6.5 percent as earnings topped analysts’ estimates and the company boosted its outlook.

The Standard & Poor’s 500 Index declined 0.5 percent to 2,105.33 at 4 p.m. in New York, after closing Friday within two points of a record. The Dow Jones Industrial Average lost 85.94 points, or 0.5 percent, to 18,105.17. The Russell 2000 rose 0.1 percent, after earlier rising as much as 0.7 percent, while the Nasdaq Composite Index slipped 0.2 percent.

“There’s a little malaise in the stock market after the reaction to the last jobs report and there’s no clear direction from the data,” said Kevin Mahn, president of Parsippany, New Jersey-based Hennion & Walsh Asset Management Inc. “The best way to characterize the market right now is trendless volatility.”

Stocks jumped the most since March on Friday after a report showed hiring bounced back in April, signaling companies are confident the economy will recover from a winter slowdown. The gain helped push the S&P 500 up 0.4 percent for the week.

About 5.7 billion shares traded hands on U.S. exchanges Monday, 13 percent below the three-month average and the fewest in almost a month.

Jobs, Earnings

The jobs data bolstered investor optimism that economic growth is accelerating, while the pace was not fast enough to warrant higher interest rates in June. Concern the Federal Reserve would raise borrowing costs, along with forecasts for a slump in corporate profits, have whipsawed stocks between gains and losses during the past five weeks.

Federal Reserve Bank of San Francisco President John Williams reiterated on CNBC Monday that policy makers could raise rates at any meeting, depending on economic data. The next major report is April retail sales on Wednesday.

Companies are beating earnings estimates and analysts have reversed their predictions for a slump. S&P 500 members are now on track to deliver income growth of 0.2 percent in the first quarter, compared with projections for a 5.8 percent decline as recently as March. Analysts still predict declines in the following two quarters.

Energy Tumbles

The Chicago Board Options Exchange Volatility Index rose 7.7 percent Monday to 13.85. The gauge, known as the VIX, ended Friday with its second straight weekly gain for the first time since March 13.

All of the S&P 500’s 10 main groups retreated. Energy shares slumped 2.1 percent, the most in more than three months. Noble Energy lost 6.2 percent, the biggest drop since Jan. 5, amid its Rosetta Resources buyout. The deal gives Noble a position in two of the largest areas of shale production in Texas. Murphy Oil Corp. and Pioneer Natural Resources Co. slipped at least 3.3 percent.

The energy group had rallied almost 10 percent since March 13 through Friday, led by 42 percent surges in Range Resources Corp. and Transocean Ltd. Noble Energy was up 26 percent during the same period.

Raw-Materials Slip

Monsanto Co. and Alcoa Inc. declined more than 1.2 percent to pace a drop in raw materials. FMC Corp. lost 0.4 percent, and earlier down as much as 2.7 percent, after first-quarter sales and profit missed estimates. The agricultural chemical company cited volatile currency movements, and “a high degree of uncertainty in global agricultural markets and crop specific headwinds in the Brazil crop protection markets.”

NetApp Inc. fell 1.9 percent to lead a slide among technology shares after Pacific Crest Securities LLC analyst Brent Bracelin cut the stock to underweight from sector weight. Xerox Corp. and Yahoo! Inc. retreated 1.1 percent.

Salesforce.com Inc. lost 1.7 percent as the stock was removed from Morgan Stanley’s ‘best ideas’ list. The shares had climbed 7 percent in the past two weeks amid merger speculation.

Hilton Worldwide Holdings Inc. slipped 1.4 percent after the company said Blackstone Group LP is selling 90 million shares of its stock, reducing its stake in the world’s biggest hotel operator to less than 50 percent.

Caterpillar Rallies

Actavis advanced 3.1 percent, the most in three months, to lead gains among health-care companies. Tenet Healthcare Corp. and Bristol-Myers Squibb Co. gained more than 1.5 percent as the group closed little changed. The Nasdaq Biotechnology Index advanced for a fourth consecutive day.

News Corp. added 3.8 percent, the biggest climb since Feb. 3, as the company said it began repurchasing shares of Class A stock under a previously disclosed buyback program.

Caterpillar Inc. rose 1.7 percent to a four-month high and Joy Global Inc. added 5.2 percent after Robert W. Baird & Co. raised the shares to outperform, citing a potential bottom in commodity prices.

Dean Foods Co. rallied 6.5 percent, the most since November, as the largest U.S. dairy processor forecast better-than-expected second-quarter earnings following a decline in raw-milk costs.

Nevro Corp.

On Assignment Inc. jumped 15 percent, the biggest gain in more than three years, after agreeing to pay $570 million in cash and equity for Creative Circle LLC in the staffing firm’s move to expand into online marketing.

Nevro Corp. soared 18 percent, the most since March and added to the Russell 2000’s advance, after the Food and Drug Administration approved its spine stimulator to treat chronic back pain.

Zulily Inc. rose 5.2 percent after a regulatory filing said Alibaba Group Holding Ltd. bought $56.2 million of stock in U.S. online retailer.

Monster Beverage Corp. rebounded 4.3 percent, its best advance in more than two months. Shares fell more than 10 percent Friday, its worst decline since October 2012, after first-quarter results disappointed investors.

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