U.S. stocks retreated, with the Standard & Poor’s 500 Index slipping below its average price during the past 100 days, after weekend negotiations between Greece and its creditors broke down and factory data were weaker than forecast.
Industrial shares led declines as United Technologies Corp. dropped 2.5 percent after lowering its 2015 profit target amid weakness at the Sikorsky helicopter unit being targeted for divestiture. Micron Technology Inc. lost 3.5 percent after an analyst downgrade. Microsoft Corp. fell 1.1 percent, down for a third day. Cigna Corp. jumped 12 percent after a report that it was a takeover target.
The S&P 500 slid 0.5 percent to 2,084.43 at 4 p.m. in New York, after earlier losing as much as 1 percent. The Dow Jones Industrial Average fell 107.67 points, or 0.6 percent, to 17,791.17, and the Nasdaq Composite Index dropped 0.4 percent. About 5.9 billion shares changed hands on U.S. exchanges Monday, 7.6 percent below the three-month average.
“All eyes are on the tumultuous Greek negotiations which have moved the risk markets not only here in the United States, but across the globe,” said Chad Morganlander, a money manager in Florham Park, New Jersey, for Stifel, Nicolaus & Co., which oversees about $170 billion. “That as well as the weekly thematic will be the message from central banks, in particular the Federal Reserve.”
The latest round of bailout talks between Greece and its creditors ended in acrimony after leaders met for just 45 minutes in Brussels on Sunday. European policy makers raised pressure on Greece to return to the negotiating table and make further concessions to unlock aid, as each side laid out its demands to rally support for its respective position.
The Federal Reserve begins a two-day meeting Tuesday, at which officials are expected to leave interest rates unchanged. Improving economic reports since the central bank’s last session have pushed the probability for a September increase to 53 percent, data compiled by Bloomberg show. Chair Janet Yellen may provide further clues at a press conference on June 17.
Manufacturing data today showed improvement from early year weakness remains uneven. Factory production unexpectedly declined in May as the slump in energy output deepened. The sluggish data signal that a stronger dollar and decrease in fuel prices are still holding back American factories. An earlier report showed manufacturing activity in the New York region unexpectedly worsened this month amid a drop in new orders.
Another report showed confidence among homebuilders rebounded in June to a nine-month high as warmer weather and a brighter economic outlook drew prospective buyers back to the market.
The specter of higher borrowing costs is also keeping U.S. equities in check, even after data last week signaled a pickup in consumer spending. The S&P 500 Friday finished its seventh straight week with a move of less than 1 percent.
The Chicago Board Options Exchange Volatility Index jumped 12 percent Monday to 15.38, an 11-week high. The gauge, know as the VIX, slipped 3 percent last week.
Industrial and consumer staple companies fell the most of 10 main groups in the S&P 500 Index. United Technologies had its biggest drop in three months, weighing on the industrials group along with the weaker-than-forecast factory data. Rockwell Automation Inc. and Raytheon Company lost more than 1.4 percent to pace a retreat among capital goods companies. 3M Co. decreased 1.4 percent to a seven-month low.
Micron Technology declined the most in the benchmark gauge, down 3.5 percent to the lowest in more than a year after being cut to the equivalent of sell by Morgan Stanley. Microsoft lost 1.1 percent for its ninth drop in 10 sessions, while Teradata Corp. declined 2.8 percent to its lowest since 2010 after JMP Securities LLC downgraded the stock. SanDisk Corp. fell 2.9 percent to a two-month low.
Netflix Inc. declined 1.1 percent. Alibaba Group Holding Ltd. is planning to build China’s version of Netflix and HBO via a new service called Tmall Box Office, as it tries to service 600 million families craving more entertainment content.
Fiat Chrysler Automobiles NV slumped 2.6 percent. Morgan Stanley restricted coverage of General Motors Co. and Fiat Chrysler by analyst Adam Jonas because GM, a longstanding advisory client, disclosed that FCA approached it about a merger, said two people familiar with the matter.
Coal miner Peabody Energy Corp. slid 5.5 percent to an all-time low. Shares dropped for a fourth consecutive session and have lost 27 percent over the period.
Cigna surged 12 percent to a record. A person with knowledge of the matter said Anthem Inc. has explored takeovers of smaller health-insurance rivals Cigna and Humana Inc. Anthem gained 2.3 percent.
Cigna’s rally helped to push health-care companies in the S&P 500 higher. Aetna Inc. rose 4.4 percent, the most in more than a year, to an all-time high. UnitedHealth Group Inc. advanced 1.1 percent.
Standard Pacific Corp. and Ryland Group Inc. added at least 5.2 percent after the homebuilders agreed to merge. The combined entity, which will build entry-level to luxury homes, will be in 41 metropolitan areas and 17 states. The deal, coupled with a jump in monthly builders’ sentiment, lifted an S&P index of builders 0.7 percent to a three-week high.
Dealertrack Technologies Inc. soared 58 percent after Cox Enterprises’ automotive unit agreed to buy the supplier of software services for vehicle retailers for $4 billion to expand from used-car services and data.
CVS Health Corp. will pay $1.9 billion to buy Target Corp.’s pharmacies and clinics, expanding its reach by adding stores bearing its name inside the U.S. retail chain. Target gained 1.2 percent, while CVS added 0.4 percent after earlier rising as much as 1.1 percent.