June 21 (Bloomberg) -- U.S. stocks tumbled, sending the Standard & Poor’s 500 Index lower for a second day, as signs of a slowdown in global manufacturing added to disappointing housing and labor market data at the world’s largest economy.
Alcoa Inc. and Chevron Corp. slumped at least 3.2 percent as commodities were poised to enter a bear market. Bed Bath & Beyond Inc. lost 17 percent as its earnings forecast trailed estimates. Red Hat Inc., the largest seller of the open-source Linux operating system, fell 5.8 percent as billings missed some projections. ConAgra Foods Inc. rose 3.1 percent as the maker of Hebrew National hot dogs forecast profit that beat estimates.
The S&P 500 retreated 2 percent to 1,328.61 at 3:37 p.m. in New York. The Dow Jones Industrial Average declined 217.29 points, or 1.7 percent, to 12,607.10. The Russell 2000 Index dropped 2.4 percent to 765.58. Trading in S&P 500 companies was about in line with the 30-day average at this time of day.
“The global economy has lost momentum,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia for PNC Wealth Management. “It feels like those patches where we’ve stalled a bit. We may come back out of it, but we’ll have to wait.”
Stocks from Hong Kong to London and Sao Paulo slumped on concern about a global slowdown. Data showed euro-area manufacturing shrank at the fastest pace in three years and a Chinese output gauge indicated contraction. More Americans than forecast filed claims for jobless benefits, manufacturing in the Philadelphia region shrank and sales of existing homes fell.
‘Very Sluggish’
The reports came out a day after the Federal Reserve cut its forecasts for growth and employment while noting “significant downside risks” to the economy. The Federal Open Market Committee yesterday extended its Operation Twist program and will swap $267 billion in short-term securities with longer- term debt through the end of 2012. Alan Greenspan, the former Fed chairman, said the U.S. economy “looks very sluggish.”
The Citigroup Economic Surprise Index for the U.S., which measures how much data is missing or beating the median estimates in Bloomberg surveys, fell to minus 64.8, the lowest since August. It turned negative this year in April after remaining above zero since October. The Federal Reserve announced Operation Twist to boost growth on Sept. 21, 2011, four months after the index turned negative.
A challenging economic environment has made Goldman Sachs Group Inc. analyst Noah Weisberger recommend shorting the S&P 500, or bet on further declines. He has a target of 1,285, or 5.2 percent below yesterday’s close.
“Although yesterday’s FOMC delivered easing as expected, with a dovish statement, positive risk sentiment ahead of the FOMC had already buoyed markets,” Weisberger wrote. “With incremental U.S. monetary policy on hold, the market will need to confront a deteriorating growth picture near term.”
Expectations for further policy action gave stocks their first back-to-back weekly gain since April on June 15. The S&P 500 earlier this month was on the brink of a so-called correction, or a 10 percent drop from a recent peak, on concern about a global slowdown and a worsening of Europe’s crisis.
The euro fell the most this month against the dollar as Moody’s Investors Service told banks it may announce credit downgrades for as many as 17 lenders and securities firms. Spain’s banks would need as much as 62 billion euros ($78 billion) in capital to withstand a worst-case economic scenario, according to two consulting firms hired by the government to conduct stress tests on the lenders.
All 10 groups in the S&P 500 retreated as commodity, consumer discretionary and technology shares had the biggest losses. The Morgan Stanley Cyclical Index of companies which are most-dependent on economic growth lost 2.7 percent.
Commodity Shares
Measures of energy and raw material producers in the S&P 500 lost at least 3 percent. The S&P GSCI gauge of 24 commodities slid to the lowest level since November 2010 and is down more than 20 percent from a closing high in February.
Alcoa, the largest U.S. aluminum producer, dropped 3.8 percent to $8.58. Chevron decreased 3.2 percent to $100.28.
Bed Bath & Beyond declined 17 percent, the most ever on a closing basis, to $61.09. It said comparable-store sales in the first quarter rose 3 percent compared with 7 percent a year earlier. Analysts projected a gain of 3.8 percent, the average of five estimates compiled by Bloomberg.
Red Hat dropped 5.8 percent to $53.25. Billings, a predictor of revenue, were $310 million in the quarter ended May 31, falling short of the $319 million average analyst estimate, said Abhey Lamba, an analyst at Mizuho Securities USA Inc.
Celgene Corp. fell 11 percent to $59.57. It withdrew its application in Europe to expand regulatory approval of Revlimid as a first option and maintenance therapy for patients with a deadly blood cancer.
Micron Technology Inc. retreated 7.4 percent to $5.67. The largest U.S. maker of computer memory reported a fourth consecutive quarterly loss after prices fell for chips used to store data in phones and tablets, crimping sales.
ConAgra jumped 3.1 percent, the most in the S&P 500, to $25.36. The company forecast fiscal year 2013 earnings of at least $1.95 a share. On average, the analysts surveyed by Bloomberg estimated profit of $1.92.
Onyx Pharmaceuticals Inc. surged 43 percent to $63.70, the highest level on record. The company won support from a U.S. advisory panel for its drug to treat a deadly blood cancer that affects 50,000 Americans.
Facebook Inc. added 0.4 percent to $31.71. The social- network’s 22 percent rally in two weeks through yesterday has helped the company avoid posting the biggest slump among the largest U.S. initial public offerings since the start of 2011.
$16 Billion
Facebook, which set a record for technology companies by raising $16 billion last month, has unveiled new products and services after the shares tumbled to a low of $25.87 on June 5. PetroLogistics LP dropped 20.4 percent in its first month of trading, or 3.1 percentage points more than Facebook, giving the propylene maker the worst return among the 30 largest IPOs since the beginning of last year, data compiled by Bloomberg show.
Concern Facebook was overvalued and that the company will struggle to increase revenue fast enough pushed the stock down as much as 32 percent from its IPO price of $38 on May 17.
Since the shares bottomed earlier this month, Facebook introduced a real-time bidding platform to better target ads to consumers and ComScore Inc. released research that showed marketing on the social network is effective.
“Investors are starting to come around to see the significant opportunity of the Facebook platform,” Victor Anthony, a New York-based analyst at Topeka Capital Markets Inc., said in a telephone interview. He has a buy rating on the stock. “It was a botched IPO process but ultimately, the underwriters did their job. If the stock increasingly marches up, all the concerns will be tapered down.”
