U.S. stocks declined, sending the Standard & Poor’s 500 Index toward the lowest closing level since March, as Greece struggled to form a new government amid growing speculation the nation may leave the euro region.
Financial and energy shares had the biggest losses in the S&P 500 among 10 industries. JPMorgan Chase & Co. and Bank of America Corp. fell at least 1.1 percent as European lenders slumped. ConocoPhillips and Dow Chemical Co. slid more than 0.7 percent to pace declines in commodity producers. Symantec Corp., the biggest seller of security software, retreated 0.6 percent after Goldman Sachs Group Inc. cut its recommendation.
The S&P 500 slipped 0.6 percent to 1,345.42 at 2:28 p.m. New York time, after dropping as much as 1.2 percent earlier. The Dow Jones Industrial Average fell 67.92 points, or 0.5 percent, to 12,752.68. Trading in S&P 500 companies was 4.1 percent below the 30-day average at this time of day.
“The fear factor is definitely higher,” said Madelynn Matlock, who helps oversee about $14.7 billion at Huntington Asset Advisors in Cincinnati. “The whole European political situation is really the focus at this point. Nobody really knows what’s going to happen next and the market hates uncertainty more than anything.”
Global stocks fell as Greece’s political deadlock went into a second week after President Karolos Papoulias failed to secure agreement on a unity government and avert new elections with the country heading toward a possible exit from the euro area. Alexis Tsipras, leader of Greece’s Syriza party, said Europe must reexamine its policy of austerity and that his party wants Greece to stay in the euro.
Concern about Europe’s crisis grew as the cost of insuring against a Spanish default jumped to an all-time high. Chancellor Angela Merkel’s party was defeated in Germany’s most populous state in an election that helped the Social Democrats tighten their grip on the country’s regional governments. The result may embolden the Social Democrats as they align with French President-elect Francois Hollande in an anti-austerity front.
“We certainly have a lot to worry about,” said John Manley, chief equity strategist for Wells Fargo Advantage Funds in New York. His firm oversees $207 billion. “The odds of Greece leaving the euro are higher. It’s an enormous game of chicken that they are playing with each other. To the degree it does represent the democratic process in Greece, it makes it more likely they default and the Europeans have to do something.”
American banks slumped as a measure of European lenders tumbled 2.8 percent. JPMorgan, which plunged 9.3 percent on May 11, lost 2.2 percent to $36.16. Bank of America fell 1.1 percent to $7.47. Citigroup Inc. retreated 3 percent to $28.48. Morgan Stanley slid 2.9 percent to $14.51.
Moody’s Investors Service will delay plans to downgrade more than 100 banks as it assesses the effect of JPMorgan’s trading losses and a greater possibility of a euro breakup, a Moody’s official said. Fitch Ratings lowered JPMorgan’s credit grade by one level to A+ from AA- on May 11, saying the $2 billion loss “raises questions regarding JPM’s risk appetite, risk management framework, practices and oversight.”
Residential Capital LLC, the unprofitable mortgage company whose parent Ally Financial Inc. is trying to repay a U.S. government bailout, filed for bankruptcy.
Energy and raw material producers sank as the S&P GSCI gauge of 24 commodities dropped 1 percent. ConocoPhillips declined 0.7 percent to $53.13. Dow Chemical retreated 0.9 percent to $31.87.
Symantec slid 0.6 percent to $15.36. Goldman Sachs cut its rating to sell from neutral, citing worsening margins and cash flows. The share-price estimate was lowered to $14 from $16.