U.S. Stocks Decline as Greece Confers

By Rita Nazareth - Feb 7, 2012 9:31 PM GMT+0700

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a second straight day, as Greece held talks to secure rescue funds.

The S&P 500 lost 0.2 percent to 1,342.16 at 9:30 a.m. New York time.

“The rest of Europe is running out of patience with the Greeks,” said Morten Kongshaug, the chief strategist at Danske Bank in Copenhagen. “A Greek default will cause a correction of 5 to 10 percent in equities in Europe and perhaps less than half of that in the U.S., but it won’t be more.”

Greek Prime Minister Lucas Papademos plans to convene the nation’s political leaders to seek consensus on the cuts required for a bailout. Greek officials are working on the final draft of the document listing the budget and structural measures required to receive international funding, a government official said. China’s industrial output growth is likely to slow this quarter, the government said. Federal Reserve Chairman Ben S. Bernanke speaks on the state of the U.S. economy.

Equities fell yesterday, following a five-week advance for the S&P 500, amid concern about Europe’s debt crisis as Greek leaders wrestled with spending cuts to get aid and avert a default. Trading volume on U.S. exchanges yesterday accounted for about 5.9 billion shares, the lowest this year.

Set the Stage

A retreat in U.S. stocks will set the stage for the S&P 500 to approach 1,370, the level where the current bull market ran out of steam last year, according to analysts who study charts to predict market moves.

The benchmark index for U.S. equities slipped less than 0.1 percent to 1,344.33 yesterday on concern over Europe’s debt crisis as German Chancellor Angela Merkel said time was running out for Greece to accept conditions for a bailout. The S&P 500 had gained for five weeks, the longest streak in a year, sending its 14-day relative strength index, which measures the degree that gains and losses outpace each other, to the highest level since February 2011, according to data compiled by Bloomberg.

“We need to pause, rest, consolidate in order to stay healthy,” Carter Worth, New York-based chief market technician at Oppenheimer & Co., wrote in a note yesterday. “Any such consolidation would cure the market from a tad unhealthy right back to very healthy, and would be the perfect ‘setup’ for a breakout-type move to new 52-week highs.”

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