“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.
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.