U.S. Stocks Slip From Three-Week High, Paring S&P 500 2015 Gain

  • Apple shares weigh on technology companies while energy slides
  • S&P 500 clinging to a 2015 gain of less than 0.3 percent

U.S. stocks fell, with the Standard & Poor’s 500 Index struggling to hold its gain for the year in 2015’s penultimate session, as energy companies followed oil lower and a slide in Apple Inc. weighed on technology shares.

Exxon Mobil Corp. and Anadarko Petroleum Corp. sank at least 1.3 percent, as crude stockpiles expanded last week. Apple lost 1.3 percent after a person familiar with the matter said it paid $348 million to settle an Italian tax claim. Pep Boys declined 2.9 percent after Bridgestone Corp. declined to match Carl Icahn’s takeover offer of more than $1 billion for auto-parts retail chain.

The S&P 500 slipped 0.7 percent to 2,063.36 at 4 p.m. in New York, after rallying 1.1 percent Tuesday to the highest since Dec. 4. A late selloff today halted at the gauge’s average price during the past 200 days. The Dow Jones Industrial Average lost 117.11 points, or 0.7 percent, to 17,603.87. The Nasdaq Composite Index retreated 0.8 percent. About 4.6 billion shares traded hands on U.S. exchanges, the lowest for a full session this year and 35 percent below the three-month average.

“We had a nice rally yesterday, and oil is down, so maybe investors are thinking they’ll take some chips off the table,” said Matt Maley, an equity strategist at Miller Tabak & Co LLC in New York. “There just aren’t enough people at the switch today. Year-end is even thinner than it usually is because it’s coming before a long weekend. The market has been acting better the last couple of days, so people are just taking profits.”

If the S&P 500 closes 2015 higher, it will be its fourth consecutive annual gain, while a loss would make it the worst year since 2008. The index has risen as much as 3.5 percent in the year and was down 9.3 percent at its low in August. It’s 3.2 percent away from an all-time high set in May.

U.S. stocks are defying the historical trend of rallies in the final month of the year. The S&P 500 is on track for its worst December drop since the 2007, down 0.8 percent, after a series of sharp increases and selloffs. The benchmark is up just 0.2 percent for the year, after fluctuating all month on the back of the Federal Reserve’s first interest-rate rise in almost a decade.

Investor sentiment this year has seesawed between optimism that the economy is strengthening enough to handle higher borrowing costs to concern that a slowdown in China will damp global growth. Weakness in China has weighed on commodity prices, dragging down energy and raw-material shares and putting a blight on U.S. corporate profits. Energy stocks in the S&P 500 are poised for their worst year since 2008.

Housing Data

While policy makers have forecast the pace of future rate increases to be gradual, they also stressed that the path depends on progress in economic data. A report today showed contracts to purchase previously owned homes unexpectedly fell in November, confirming earlier figures that showed the industry lost momentum toward the end of the year. Rising prices and a limited supply of properties on the market have restrained buyers.

All of the S&P 500’s 10 main industries fell today, with energy stocks losing 1.5 percent and raw-material companies sinking 1 percent. The Chicago Board Options Exchange Volatility Index rose 7.5 percent to 17.29. The measure of market turbulence known as the VIX is up 7.2 percent this month after surging as much as 51 percent.

Crude Glut

Energy companies erased yesterday’s gains, bringing the group’s week-to-date losses to 2.6 percent. Southwestern Energy Co. tumbled 6.8 percent, while Chesapeake Energy Corp. and Devon Energy Corp. fell at least 3.8 percent. Nine energy companies are on track to post annual losses exceeding 50 percent. West Texas Intermediate crude futures lost 3.4 percent to $36.60 a barrel, as expanding stockpiles added to the country’s biggest-ever annual growth in oil inventories.

Dow Chemical Co. and Freeport-McMoRan Inc. retreated more than 2.1 percent to pace a slide in raw materials. The group is down 3.7 percent in December, second-worst among the benchmark’s main industries.

Apple’s 1.3 percent decline contributed the most to the tech group’s weakness. Its stock has slumped 9.3 percent in December, the most since January 2014. Yahoo! Inc. fell 2 percent, while Qorvo Inc. was down 2.5 percent.

Financial companies fell, with bank stocks leading the day’s losses. Bank of America Corp. and Citigroup Inc. slipped more than 1.2 percent, helping to drag down the KBW Bank Index by 1.1 percent for the third loss in four days.

Airlines Sink

Airline stocks fell, with a Bloomberg index of U.S. carriers down 2.1 percent. Storms and icy weather caused more than 2,100 flight cancellations across the central U.S. earlier this week, slowing travel for thousands of travelers. United Continental Holdings Inc. sank 3 percent, the most in almost three weeks. Delta Air Lines Inc. lost 1.9 percent.

Mallinckrodt Plc led the benchmark as the top performer, up 2.4 percent and rising for the first time in four days. The shares are up about 12 percent this month, which would be the strongest since May.

Among companies moving on corporate news, Weight Watchers International Inc. rallied 19 percent after Oprah Winfrey debuted a campaign endorsing the weight-loss program. The shares are headed toward a third day of gains after falling 26 percent during a seven-session losing streak.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE