By Rita Nazareth and Julia Leite - Jul 6, 2012 3:47 AM GMT+0700
U.S. stocks declined, halting a three-day advance for the Standard & Poor’s 500 Index, amid disappointment over Europe’s efforts to tame the region’s debt crisis as investors awaited tomorrow’s American jobs report.
Financial (S5FINL) shares had the biggest loss among 10 groups in the S&P 500 as Spanish and Italian bonds plunged. JPMorgan Chase & Co. (JPM) and Bank of America Corp. (BAC) retreated at least 3 percent. Retailers in the benchmark measure rose 1 percent amid June sales data. Apple Inc. (AAPL), the world’s most valuable company, advanced 1.8 percent to pace gains in technology companies.
July 5 (Bloomberg) -- Timothy Bitsberger, a managing director at BNP Paribas and a former assistant secretary for financial markets at the U.S. Treasury, talks about the U.S. economy and Federal Reserve monetary policy. Bitsberger, speaking with Betty Liu on Bloomberg Television's "In the Loop," also discusses the European Central Bank's rate-cut decision today and the region's debt crisis. (Source: Bloomberg)
July 5 (Bloomberg) -- Nathan Sheets, global head of international economics at Citigroup Inc. and former head of international finance for the Federal Reserve, talks about the European Central Bank's decision to lower its main refinancing rate to 0.75 percent from 1 percent and its deposit rate to zero from 0.25 percent. Sheets, speaking with Tom Keene, Sara Eisen, Michael McKee, Scarlet Fu and Ken Prewitt on Bloomberg Television's "Surveillance," also discusses the China's interest-rate cut. (Source: Bloomberg)
July 5 (Bloomberg) -- Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week. Applications for jobless benefits decreased by 14,000 in the week ended June 30 to 374,000, the fewest since mid May, Labor Department figures showed today. Michael McKee and Betty Liu report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
July 5 (Bloomberg) -- Maury Harris, chief economist at UBS Securities LLC in New York, talks about the global economic outlook and the role of central bank monetary policy, including China's latest cut in benchmark interest rates. Harris, speaking with Tom Keene, Sara Eisen and Ken Prewitt on Bloomberg Television's "Surveillance," also discusses the U.S. labor market. (Source: Bloomberg)
A trader works on the floor of the New York Stock Exchange (NYSE) in New York. Photographer: Scott Eells/Bloomberg
The S&P 500 decreased 0.5 percent to 1,367.58 at 4 p.m. New York time. The Dow Jones Industrial Average fell 47.15 points, or 0.4 percent, to 12,896.67. Volume for exchange-listed stocks in the U.S. was 5.3 billion shares, 21 percent below the three- month average. The market was closed yesterday for a holiday.
“There’s a bit of disappointment with the ECB,” said Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas. “Meantime, people are not willing to take big bets going into the jobs report tomorrow.”
Equities fell as European Central Bank President Mario Draghi said today’s cut in interest rates to a record low may have only a limited impact on the euro-area economy. China also reduced rates in a bid to spur growth. Tomorrow’s Labor Department data may show the pace of hiring in the U.S. accelerated in June while remaining at less than half the average for the first quarter of the year, economists said.
Today’s economic reports showed that fewer Americans filed jobless claims and hiring beat estimates. Service industries expanded at a slower pace, underscoring Federal Reserve concern that growth isn’t strong enough to reduce unemployment.
Equity Rout
The last jobs report spurred a rout in stocks, erasing the 2012 gain in the Dow and putting the S&P 500 on the brink of a so-called correction, or a 10 percent decline from a recent peak. The benchmark gauge tumbled 2.5 percent on June 1 after data showed employers added the fewest workers in a year and the unemployment rate rose. Since then, the S&P 500 has risen 7 percent amid bets on global central bank action.
Eight out of 10 groups in the S&P 500 retreated today as financial and energy shares dropped at least 1.3 percent. The Morgan Stanley Cyclical Index of companies most-tied to economic growth closed almost unchanged after slumping as much as 0.9 percent and gaining 0.5 percent earlier today.
Twenty three out of 24 stocks in the KBW Bank Index (BKX) declined. JPMorgan Chase & Co. slumped 4.2 percent, the most in the Dow, to $34.38. The lender was ordered by a federal judge to explain why it shouldn’t be compelled to turn over e-mails sought by U.S. regulators in a probe of potential energy-market manipulation. Bank of America slid 3 percent to $7.82.
Apple Rallies
Technology shares, which comprise 20 percent of the S&P 500, reversed an earlier decline. Apple climbed 1.8 percent to $609.94, the highest since April 25.
Consumer companies in the S&P 500 rallied. U.S. retailers’ June same-store sales about matched analysts’ estimates, with luxury chains such as Saks Inc. (SKS) and discounters like TJX Cos. (TJX) topping expectations. Stores targeting middle-income consumers trailed projections.
“The high-end consumer has fared particularly well throughout this recovery,” Ken Perkins, president of Swampscott, Massachusetts-based Retail Metrics, said in an interview. “On the low end, a lot of middle-income consumers have traded down.”
TJX, which owns discount stores T.J. Maxx and Marshalls, rose 3.7 percent to $44.09. Limited Brands Inc. (LTD), the parent company of Victoria’s Secret, jumped 4.5 percent to $46.12, while Saks gained 2.5 percent to $11.19. Sales at Target Corp. (TGT) rose 2.1 percent, falling short of the average projection. The shares dropped 1.1 percent to $57.15.
Chinese Companies
Chinese stocks traded in the U.S. gained as Baidu Inc. (BIDU), the nation’s largest online search engine, rose to a two-week high after policy makers cut interest rates for a second time in a month to bolster growth.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. rose 0.8 percent to 92.49, the highest level since June 20. Baidu advanced 2.2 percent to $117.21. Sina Corp. (SINA), operator of the Twitter-like Weibo service, rallied 1.4 percent to $51.21.
“The Chinese authorities are trying to help stem the slowdown in global growth, and that’s a good thing,” said Audrey Kaplan, who helps manage $2 billion as head of international equities at Federated Global Investment Management in New York. “We see this as a great entry point for Chinese stocks.”
Netflix Soars
Netflix Inc. (NFLX) soared 13 percent, the most since January, to $81.72. The largest video-subscription service also had the biggest gain in the S&P 500 (SPX) after an analyst said the company’s online audience exceeds cable and TV networks.
Yelp Inc. (YELP) surged 5.8 percent to $26.16 amid speculation that a smaller model of Apple’s iPad could help the business- review service add users. Apple plans to debut a smaller, cheaper iPad by the end of the year, people familiar with the matter said earlier this week.
Patriot Coal Corp. (PCX) climbed 23 percent to $2.26 on speculation it may be near a deal to refinance its debt. The shares have jumped 85 percent in three days, the most since it was spun off from Peabody Energy Corp. in October 2007.
To contact the reporters on this story: Rita Nazareth in New York at rnazareth@bloomberg.net; Julia Leite in New York at jleite3@bloomberg.net
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