The Standard & Poor’s 500 Index fell to a two-month low amid declines in airline and semiconductor shares, as investors considered the timing of an interest-rate increase and the outlook for Greece’s debt talks.
Airlines retreated on concerns about capacity growth, while chipmakers slid for a sixth straight day. Intel Corp. decreased 1.7 percent. EBay Inc. sank after its PayPal unit trimmed its 2015 free-cash flow view. Wynn Resorts Ltd. lost 6.2 percent to weigh on consumer discretionary shares. Sealed Air Corp. added 1.2 percent after Jefferies LLC said the company may buy back more than $1 billion in shares.
The S&P 500 Index dropped 0.7 percent to 2,079.28 at 4 p.m. in New York, the lowest since April 7, and below its average price during the last 100 days. The Dow Jones Industrial Average lost 82.91 points, or 0.5 percent, to 17,766.55. The Dow also closed at a two-month low and erased its 2015 gain. The Nasdaq Composite Index declined 0.9 percent.
“Investors want to see stronger growth and they are still trying to figure out when the Fed is likely to move and that’s a good three months away,” said Peter Dixon, an economist at Commerzbank AG in London. “Equities have had such a good run until recently that people are taking a bit of risk off the table and standing on the sidelines deciding how to play this.”
Reports on consumer sentiment and retail sales are due this week, both of which are forecast to show an improving economy. Jobs data Friday showed the strongest hiring in five months and the biggest wage gains in two years, bolstering bets the Federal Reserve will raise interest rates this year.
Investors are also looking for signs of progress in negotiations between Greece and its international creditors. With talks resuming in Brussels on Monday, Prime Minister Alexis Tsipras faced a united front from Group of Seven leaders calling for movement to end the impasse and avert the risk of wider economic reverberations.
The S&P 500 posted back-to-back weekly declines for the first time since March as investors weigh equity valuations amid the potential Fed rate increase this year.
Consumer expectations for inflation rebounded in May, according to a Fed Bank of New York survey, as officials look for evidence that price pressures are firming.
In the quarter after the last 12 tightening cycles began, price-earnings ratios on the benchmark index contracted by an average of 7.2 percent. It’s something else to worry about as the Fed prepares to lift rates in an economy that is still far from booming.
Should policy makers move before January, they would be doing so in a year when U.S. profits are forecast by analysts to increase 1.4 percent. That represents the weakest growth at the start of a tightening cycle since 1980.
“People talk about how equities have done well six months after tightening but the Fed has never been at zero for this long,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “It’s inevitable an equity correction is coming.”
The Chicago Board Options Exchange Volatility Index gained 7.6 percent to 15.29, its highest close in more than two months. The gauge, known as the VIX, marked a second consecutive weekly advance Friday. About 5.6 billion shares traded hands on U.S. exchanges Monday, about 13 percent below the three-month average.
Nine of the S&P 500’s 10 main groups declined, with technology, industrial and consumer discretionary companies leading the drop. Phone companies climbed as Verizon Communications Inc. bounced 0.4 percent after sliding 1.8 percent Friday. Frontier Communications Corp. rose 1.3 percent.
Semiconductors in the S&P 500 fell as Avago Technologies Ltd. and Micron Technology Inc. sank at least 2.5 percent. Avago’s buyout target Broadcom Corp. decreased 2 percent. Intel extended its losing streak to six days, the longest since January 2014. Shares lost 1.7 percent and are down more than 9 percent since announcing on June 1 its $16.7 billion deal to buy Altera Corp.
Also dragging down the tech group, Apple Inc. slumped 0.7 percent, earlier down as much as 1.4 percent, and Facebook Inc. fell 1.8 percent. International Business Machines Corp. declined 1.2 percent to a seven-week low.
A Bloomberg gauge of U.S. airlines tumbled 4.4 percent to its lowest since November. JetBlue Airways Corp. retreated 7.2 percent, and American Airlines Group Inc. dropped 4.5 percent as Raymond James Financial Inc. downgraded its shares. The firm also cut Delta Air Lines Inc. and United Continental Holdings Inc., which slid more than 4.3 percent. The Dow Jones Transportation Average lost 2.1 percent.
Wynn Resorts fell 6.2 percent, the most in more than a month after several analysts said gambling revenue this month in Macau will be below their initial estimates. Las Vegas Sands Corp. and MGM Resorts International declined at least 5 percent.
Energy shares erased an early gain to fall along with oil prices. Devon Energy Corp. and Apache Corp. lost more than 1.9 percent. Chevron Corp. dropped 1.2 percent to an almost three-year low.