• S&P 500 sinks for third week in longest slide since January
  • Apparel makers lead losses as Macy’s to Nordstrom disappoint

The weakness plaguing consumer companies proved contagious and pushed U.S. stocks to the longest streak of weekly declines since January’s market meltdown.

The S&P 500 Index dropped for a third week after disastrous reports from Macy’s Inc. to Nordstrom Inc. sent retail shares tumbling. While apparel makers led the decline, falling to a three-month low, the selling affected a swath of industries that rely on consumer spending. Airlines, media companies and real-estate firms all sank at least 1.8 percent.

It’s another gut-check for investors who have survived two separate 10 percent corrections in the last eight months and now are asking whether three straight down weeks presages the cycle’s next leg. Not that they’ve been waiting to find out: data from Bank of America shows $44 billion was pulled from equities in the past five weeks, the most since 2011.

One feature of the latest round of weakness has been its orderliness, with the losses doing little to levitate the CBOE Volatility Index, the famous fear gauge. Stocks went 18 days through Monday without a swing of more than 1 percent, the longest stretch since December 2014.

“Everyone is hoping for the best, and a little bit too much optimism is creating the orderly nature of the selloff. But the bias right now is lower,” Phil Orlando, who helps oversee $360 billion as chief equity-market strategist at Federated Investors Inc. in New York, said by phone. “Investors are processing a number of bad data points we’ve seen over the last couple of weeks. Stocks are still ahead of themselves and ought to pull back more.”

The S&P 500 fell 0.5 percent to 2,046.61 in the five days, to the lowest level in a month. The selloff in consumer stocks shook U.S. equity markets from a torpor that took hold following a nine-week rally of 15 percent. The S&P 500 ended the week with a three-day slide of 1.8 percent, and closed Friday below its average price for the past 50 days for the first time in two months, a technical level that analysts view as bearish.

The weak retailer forecasts came as data showed a spike in claims for unemployment a week after jobs growth was less than forecast, fueling concern that the biggest part of the American economy is vulnerable. Data Friday that showed the best monthly gain in retail sales in a year didn’t alter perceptions that consumer spending remains tepid as the Federal Reserve considers tightening monetary policy.

“Earlier in the week investors were caught up in, is the consumer dead? With the claims report spiking they put two and two together, thinking that the consumer must be getting hurt pretty badly,” said John Canally, chief economic strategist at LPL Financial in Boston, which oversees about $460 billion. “Retail numbers helped with the idea that the consumer is rolling over, but there’s still a lot of lingering questions.”

U.S. stocks started the week with their biggest gain in two months, as a rebound in commodities pushed oil prices to a six-month high amid signs of an easing supply glut. Reports showed crude supply reductions from the U.S. to Nigeria, while Glencore Plc on Tuesday forecast metals demand to exceed supply.

The optimism faded midweek, as retailer results poured in. Gap Inc. tumbled 19 percent, J.C. Penney Co. fell for the eighth straight week and Nordstrom lost 19 percent after each delivered glum outlooks for sales this year, renewing concerns about the broader industry. With mall foot traffic showing no signs of picking up, Macy’s slashed its profit forecast for the year, sending it to a loss of 17 percent.

The weakness spread as jittery investors dumped shares in media companies, led by an 8 percent drop at News Corp., while Walt Disney Co. tumbled the most since January after results missed estimates. Real-estate firms lost 1.7 percent.

Company news set the tone during a week that capped an already lackluster earnings season, with S&P 500 companies posting a fourth straight drop in profits. Staples Inc. plunged 19 percent after a judge halted the company’s planned merger with Office Depot Inc. on antitrust grounds. Apple Inc. sank to the lowest since June 2014 after the Nikkei newspaper reported that shipments of iPhone chips for the remainder of the year will likely shrink versus a year ago.

The S&P 500 fell in four of the year’s first six weeks, losing 11 percent amid plunging oil and rising risk in the credit markets. It rebounded 15 percent through mid-April with signs of China’s slowdown stabilizing and central bankers pledging to do what’s necessary to bolster growth. Since reaching a four-month high on April 20, the index has failed to hold above 2,100, falling 2.7 percent to sit 4 percent below its record.

“It’s still very difficult to break through and go over 2,100. Maybe if we get a good jobs number in June, the Fed gives us clarity on what’s going to happen in June, or we get a positive vote in the U.K.,” Mark Kepner, an equity strategist at Chatham, New Jersey-based Themis Trading LLC, said by phone. “But the market really can’t go higher until you see solid earnings come in.”

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