U.S. Stocks Fall, Erasing Earlier Gain on Retailer Rally

U.S. stocks fell as investors sold shares in the final half hour of a shortened trading session, erasing earlier gains fueled by a rally in online retailers amid Black Friday sales.

Archer-Daniels-Midland Co. fell 3 percent after Australia blocked a A$2.2 billion ($2 billion) takeover of GrainCorp Ltd. EBay Inc. and Amazon.com Inc. gained at least 1.8 percent. Best Buy Co. and Coach Inc. advanced more than 1.4 percent as retailers opened their doors to holiday shoppers. Apple Inc. rose 1.9 percent after a report showed the company sold three of every four smartphones in Japan last month.

The S&P 500 fell 0.1 percent to 1,805.81, reversing an earlier gain of as much as 0.4 percent. The gauge advanced 0.1 percent for the week, extending its winning streak to eight weeks, the longest since 2004. The Dow Jones Industrial Average lost 10.92 points, or 0.1 percent, to 16,086.41 today. Trading in S&P 500 stocks was 8.9 percent below the 30-day average. U.S. markets were closed yesterday for the Thanksgiving holiday and trading ended at 1 p.m. today.

“It’s very light trading,” John Manley, who helps oversee $233.6 billion as chief equity strategist for Wells Fargo Funds Management in New York, said in a phone interview. The Friday after Thanksgiving is “going to be subject to light volume.”

The S&P 500 rose 2.8 percent for the month. The benchmark gauge has climbed 27 percent in 2013, poised for its best year since 1998, and the Dow has gained 23 percent after the Federal Reserve refrained from tapering its third round of economic stimulus.

Fed Minutes

Minutes of the last Fed meeting released on Nov. 20 showed that officials are considering scaling back their $85 billion in monthly bond purchases “in coming months” if the economy improves as anticipated. Four out of five investors expect the Fed to delay a decision to begin reducing the stimulus until March 2014 or later, according to a Bloomberg Global Poll on Nov. 19.

Central bank bond purchases have helped push the S&P 500 up 167 percent from a bear-market low in 2009. Fed policy makers have been scrutinizing data to determine whether the economy is strong enough to withstand a reduction in stimulus.

Investors are awaiting reports on manufacturing and home sales next week, and the November release of non-farm payrolls on Dec. 6. Janet Yellen, who will replace Ben S. Bernanke as chairman of the Fed, has said she will ensure monetary stimulus isn’t removed too soon to support economic recovery in the U.S.

‘Sharp Eye’

“There’s going to be a very sharp eye on the incoming economic data, with the economy really being important to the next steps for the Fed and the markets,” Gary Flam, managing director and portfolio manager at Los Angeles-based Bel Air Investment Advisors LLC, said by phone. Bel Air manages $7 billion in assets.

A report today showed euro-area unemployment unexpectedly declined in October, the latest indication that the bloc’s recovery is gaining traction. Separate data yesterday showed economic confidence in the euro region improved more than economists forecast to a 27-month high in November.

The Chicago Board Options Exchange Volatility Index rose 5.5 percent today to 13.7. The gauge of S&P 500 options known as the VIX declined 0.4 percent for November.

Eight of 10 main industry groups in the S&P 500 slid today, with telephone stocks falling the most. Airlines lost 1.2 percent as a group. Southwest Airlines Co. fell 1.9 percent to $18.59 and US Airways Group Inc. sunk 2.1 percent to $23.48.

GrainCorp Deal

ADM dropped 3 percent to $40.25. Australia’s rejection of the agricultural commodities producer’s takeover prompted a record 22 percent drop in GrainCorp, the biggest crop handler on Australia’s east coast, and a slide in the local currency.

“This proposal has attracted a high level of concern from stakeholders and the broader community,” Treasurer Joe Hockey said today, ruling U.S.-based ADM’s bid of A$12.20 a share isn’t in the national interest. “Now is not the right time for a 100 percent foreign acquisition of this key Australian business.”

Technology companies gained 0.5 percent, the most among S&P 500 groups. EBay rose 2.5 percent to $50.52 and Amazon.com jumped 1.8 percent to $393.62. Online sales are projected to climb as much as 15 percent to $82 billion during the holidays, more than three times faster than the total gain of 3.9 percent to $602.1 billion, according to the National Retail Federation.

Apple rose 1.9 percent to $556.07. The company accounted for 76 percent of smartphone sales in Japan last month after the country’s largest carrier, NTT Docomo Inc., began offering the iPhone, market researcher Kantar Worldpanel ComTech said yesterday.

Retailers Rise

Retailers climbed 0.3 percent, the second-biggest gain among 24 groups in the S&P 500. Best Buy rose 2.4 percent to $40.55 and Coach jumped 1.4 percent to $57.90. Gap Inc. and Tiffany & Co. advanced, while Macy’s Inc. and Kohl’s Corp. fell after erasing earlier gains.

Millions of Americans will hit the malls today for Black Friday. The cost of hedging against losses in U.S. retailers has slipped to the lowest level in more than three years as investors speculate that an improving labor market and falling gas prices will stimulate holiday sales.

U.S. retail sales climbed at a faster-than-expected pace in October, a measure of consumer sentiment beat estimates this month and jobless claims fell to their lowest since September last week, signaling a strengthening U.S. economy. Gasoline prices are near their lowest since February 2011, while house prices are climbing at the fastest rate since 2006.

Early Opening

Sales are projected to advance 2.4 percent this holiday, the smallest increase since 2009, the year the recession ended, according to researcher ShopperTrak. Faced with six fewer days between Thanksgiving and Christmas than last year, retailers are pouring on the discounts to lure customers. Many chains opened earlier than ever this year to win market share.

“The general mood is that we’re going to have growth this year in terms of holiday season shopping, though probably less than before the crisis,” Aaron Izenstark, co-founder and chief investment officer of Iron Financial LLC’s Iron Strategic Income Fund in Northbrook, Illinois, said by phone. “There is an expectation in the market that it has started out on a positive note, so I do think that is definitely driving thoughts today in the marketplace.”