By Rita Nazareth - Nov 18, 2011 4:38 AM GMT+0700
Nov. 17 (Bloomberg) -- Savita Subramanian, head of equity and quantitative strategy at Bank of America Merrill Lynch, talks about her investment strategy and the outlook for U.S. stocks and corporate earnings. Subramanian speaks with Adam Johnson and Lisa Murphy on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Nov. 17 (Bloomberg) -- Bloomberg's Ellen Braitman reports on the performance of the U.S. equity market today. U.S. stocks fell, sending the Standard & Poor’s 500 Index to the lowest level in a month, as concern grew that Europe’s debt crisis will worsen and lawmakers will fail to agree on plans to cut the American deficit. (Source: Bloomberg)
Nov. 17 (Bloomberg) -- Barry Knapp, head of U.S. equity strategy at Barclays Capital, talks about U.S. economic data and its impact on the stock market. Knapp, speaking with Betty Liu and Dominic Chu on Bloomberg Television's "In the Loop," also discusses the outlook for the European debt crisis and the congressional supercommittee's effort to draft a deficit-reduction proposal. (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index to the lowest level in a month, as concern grew that Europe’s debt crisis will worsen and lawmakers will fail to agree on plans to cut the American deficit.
Commodity and technology shares had the biggest declines among 10 groups in the S&P 500, falling at least 2.1 percent. Sears Holdings Corp. (SHLD) slid 4.6 percent as the retailer reported a steeper loss. Applied Materials Inc. (AMAT), a producer of chipmaking equipment, sank 7.5 percent as forecasts trailed estimates. Jefferies Group Inc. (JEF) retreated 2 percent and dropped below $10 intraday for the first time since March 2009.
The S&P 500 lost 1.7 percent to 1,216.13 at 4 p.m. in New York. Losses accelerated after it fell below 1,229.10, its closing level on Nov. 9 after sinking 3.7 percent. The gauge dropped below its 100-day average. The Dow Jones Industrial Average sank 134.86 points, or 1.1 percent, to 11,770.73.
“It’s a risk-off day,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “There’s a lot of liquidation in the commodity space. You have the obvious story of European yields. The supercommittee may disappoint, but I don’t think this is going to be a main driving force behind this market. There’s too much stuff going on.”
Stocks fell as Reuters reported a euro-area official as saying there are no aid plans Italy from the European Financial Stability Facility. Spanish bonds sank, driving 10-year yields to the highest since the euro was introduced, as borrowing costs climbed at an auction. Republicans and Democrats on Congress’s supercommittee hardened their positions with less than a week until the deadline to propose deficit cuts.
100-Day Average
Today’s decline sent the benchmark measure of American equities below its average price of the past 100 days of 1,226, which could be a harbinger of more losses, according to Ryan Detrick, at Schaeffer’s Investment Research.
“It’s a bad sign for the bulls,” Detrick, the senior technical strategist at Schaeffer’s, said in a telephone interview from Cincinnati. “It’s a sign that the bears are once again trying to take charge and push things lower here. It’s a little discouraging when the market shrugs off good economic news and focus on other things.”
Earlier today, economic reports helped push stocks higher. The fewest Americans in seven months filed for unemployment benefits. Builders broke ground on more homes than forecast in October and construction permits climbed to the highest level since March 2010. Another report showed that manufacturing in the Philadelphia region expanded less than forecast in November as orders and sales cooled.
Problems With Computers
Handheld computers used by traders on the floor of the New York Stock Exchange malfunctioned near the end of session and the closing process was extended past 4 p.m., NYSE Euronext spokesman Rich Adamonis said.
More than seven stocks fell for every two that gained on U.S. exchanges. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, rose 3 percent to 34.51, surging 15 percent in four days.
Concern about global growth drove down commodity shares as China’s central bank said prices haven’t stabilized enough to loosen monetary policy. The Morgan Stanley Cyclical Index slumped 2.4 percent. Alcoa Inc. (AA), the largest U.S. aluminum producer, retreated 3.5 percent to $9.62. Intel Corp. (INTC), the world’s biggest chipmaker, lost 2.4 percent to $24.34.
Sears Slumps
Sears slumped 4.6 percent to $65.19. Hedge-fund manager Edward Lampert and new Chief Executive Officer Lou D’Ambrosio are emphasizing smaller stores, online commerce and licensing Sears’s brands to turn around the four-year sales slide. Retailers are having a harder time attracting shoppers, with consumer confidence at the lowest in more than two years.
Applied Materials fell 7.5 percent to $11.53. Profit before certain costs will be 8 cents to 16 cents a share, the company said. Revenue will decline up to 15 percent from the prior quarter, Applied said, indicating sales of as little as $1.85 billion. Analysts on average predicted profit of 18 cents on sales of $2.07 billion, data compiled by Bloomberg show.
Jefferies slumped 2 percent to $10.11. Debt of the New York-based firm tumbled today to levels considered distressed. Jefferies came under pressure from short sellers after MF Global Holdings Ltd.’s $6.3 billion bet on European debt led to an Oct. 31 bankruptcy and spurred scrutiny of similar stakes at financial firms.
Chief Executive Officer Richard Handler said turmoil around the investment bank’s shares and publicly traded debt will ease as the fallout dissipates from the collapse of MF.
‘Assault’
“It is not surprising that our bonds are under pressure after the assault on our company over the past two weeks,” Handler said yesterday in an e-mail. “Some bond investors sell first and ask questions later. We expect the market to return to normal pricing once we move beyond the ripple effect of the inaccuracies others have recently disseminated and once investors digest all the information” that Jefferies disclosed.
NetApp Inc. (NTAP) tumbled 12 percent, the most in the S&P 500, to $35.73 The maker of data-storage products forecast third-quarter adjusted earnings of no more than 60 cents a share, 4 cents less than the average analyst estimate.
Angie’s List Inc., the consumer-review website with more than 1 million paying members, surged 25 percent to $16.26 in its trading debut after raising $114 million in an initial public offering.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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