U.S. Stocks Fall as Energy Drops Amid Greek Debt Negotiations

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Greek No Vote: End of an Era for Greece?

U.S. stocks fell, with the Standard & Poor’s 500 Index extending its steepest weekly drop since March, as energy shares tumbled with the price of oil and investors weighed negotiations over Greece’s financial crisis.

Transocean Ltd. and ConocoPhillips fell more than 2.4 percent as West Texas Intermediate crude lost more than 7 percent. Aetna Inc. slid 6.4 percent, the most in three years, after agreeing to buy rival health insurer Humana Inc. for about $35 billion in cash and stock. Humana rose 0.8 percent.

The S&P 500 slipped 0.4 percent to 2,068.76 at 4 p.m. in New York, after earlier erasing a 0.9 percent drop. The gauge lost 1.2 percent last week. The Dow Jones Industrial Average declined 46.53 points, or 0.3 percent, to 17,683.58. The Nasdaq Composite Index retreated 0.3 percent. About 6.7 billion shares changed hands on U.S. exchanges, 6.3 percent above the 3-month average.

“After five years, you have to believe a measure of the news from Greece is already built into the market,” said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W. Baird & Co., which oversees $110 billion, said by phone. “How many times can you be concerned about the same news? I think it loses its effectiveness over the near term.”

While investors sold riskier assets after Greeks voted in a referendum Sunday to reject their creditors’ austerity terms for aid, the declines were muted compared with a week ago.

The onus is on Greece to act quickly to avoid a meltdown of its banks, which the government said will now remain shut through Wednesday. German Chancellor Angela Merkel and French President Francois Hollande are due to meet other euro-region leaders tomorrow.

‘Certain Preference’

Greek Finance Minister Yanis Varoufakis resigned, a move investors speculated may aid talks with creditors. Varoufakis said there was “a certain preference” among European creditors that he no longer be involved in negotiations.

“I think it’s going to be hard to get any real traction until we get some type of clarity,” said Walter Todd, who oversees about $1 billion as a chief investment officer for Greenwood Capital. “You can’t escape the noise created by this situation. Our opinion has been and remains at this point that Greece is more noise than anything else.”

U.S. stocks fell the most in three months last week as the escalating crisis in Greece stole attention from U.S. economic data and the Federal Reserve. The S&P 500 pared its 2015 gain to 0.5 percent Monday, and finished 2.9 percent below its all-time high set in May.

Economic Data

The gauge suffered its biggest single-day decline of the year last Monday, down 2.1 percent, after Greece closed its banks and imposed capital controls.

The uncertainty in Greece overshadowed U.S. economic data that, while improving, wasn’t strong enough to boost prospects for an increase in Fed interest rates. A report Thursday showed the U.S. economy added 233,000 jobs in June while wages stagnated and the size of the labor force receded.

Data Monday showed growth at U.S. service industries picked up in June from a more than one-year low, signaling steady improvement in the biggest part of the economy.

Investors will receive more signals on the health of the economy on Wednesday when earnings season kicks off and the Fed releases the minutes from its June meeting. The Federal Open Market Committee voted to keep the main rate at zero, where it has been since late 2008, as officials hold out for more decisive evidence of an economic rebound.

Quarterly earnings season begins that same day with Alcoa Inc. scheduled to report after the market closes. Analysts forecast corporate profits will contract 6.5 percent for the period before turning positive in the fourth quarter, according to data compiled by Bloomberg. Profits will end up growing 1.2 percent for the full 12 months, the data show.

The Chicago Board Options Exchange Volatility Index added 1.3 percent to 17.01, after an earlier 13 percent jump. The gauge, known as the VIX, posted its biggest weekly gain Thursday since January, up 20 percent.

Energy Retreats

Nine of the S&P 500’s 10 main groups slid, with energy, raw-materials and industrial shares posting the biggest declines. WTI crude fell the most in five months amid concerns about demand and ample supplies.

Transocean declined to a three-month low, and National Oilwell Varco Inc. lost 5 percent, the most in two months to pace energy losses after an industry report last week showed that the number of U.S. oil rigs in use advanced for the first time this year.

Metals miner Freeport-McMoRan Inc. retreated 3 percent to its lowest since March 19. Copper futures fell the most since January amid a slump in industrial metals as moves by China to halt a stock-market collapse and Greece’s vote against austerity added to concern that global demand will ebb.

Industrial companies in the S&P 500 slumped to their lowest level in more than eight months. Mining equipment maker Joy Global Inc. sank 2.9 percent to a six-year low. Caterpillar Inc. and General Electric Co. lost more than 1.5 percent.

Chipmakers Slide

Aetna tumbled 6.4 percent after takeover target Humana cut its earnings outlook due to higher-than-expected hospital admissions in its Medicare business. Humana rose 0.8 percent after Aetna agreed on Friday to purchase the second-largest U.S. provider of private health plans for the elderly.

Keurig Green Mountain Inc. slid 3.4 percent to the lowest since 2013 after SunTrust Robinson Humphrey Inc. cut its price target to $70 from $95. The maker of the K-Cup single-brewing system has fallen 43 percent in the past 12 months.

Intel Corp. and Micron Technology Inc. lost at least 1.7 percent as semiconductors in the benchmark index fell for the first time in four sessions to their lowest level since October.

United Continental Holdings Inc. jumped 4.6 percent to lead a Bloomberg index of U.S. airlines higher. CRT Capital Group LLC raised United’s stock to buy from fairly valued with a $70 target, 30 percent above the shares’ current price. Alaska Air Group Inc. and Allegiant Travel Co. added more than 1.7 percent.

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