July 5 (Bloomberg) -- U.S. stocks retreated, snapping a three-day advance for the Standard & Poor’s 500 Index, as optimism with jobless claims data fizzled after European Central Bank President Mario Draghi said economic risks remain.
Nine out of 10 groups in the S&P 500 retreated as financial and energy shares had the biggest losses. JPMorgan Chase & Co. and Anadarko Petroleum Corp. dropped at least 3.2 percent to pace declines in the largest companies. Target Corp. slumped 1.2 percent, while Limited Brands Inc. rallied 5.5 percent amid sales data. Advanced Micro Devices Inc., a maker of processors for personal computers, lost 3 percent after a downgrade.
The S&P 500 declined 0.6 percent to 1,365.78 at 10:30 a.m. New York time. The Dow Jones Industrial Average dropped 69.18 points, or 0.5 percent, to 12,874.64. The market was closed yesterday for a holiday. Trading in S&P 500 companies was down 16 percent from the 30-day average at this time of day.
“There’s a bit of disappointment with the ECB as Draghi continues to focus on the downside risks,” Mike Ryan, the New York-based chief investment strategist at UBS Wealth Management Americas, said in a telephone interview. “Meantime, people are not willing to take big bets going into the jobs report.”
Equities fell as Draghi said some risks to growth have “materialized.” Both the ECB and China announced interest rate cuts today in a bid to spur growth. The Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90 percent of the economy, fell to 52.1 in June from the prior month’s 53.7, missing estimates.
Earlier gains were driven by data showing that fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, while companies in the U.S. added more workers than forecast in June.
Investors also awaited tomorrow’s jobs report, which may show the weakest quarter for employment in more than two years. The jobless rate, which has exceeded 8 percent for 40 consecutive months, may have held at 8.2 percent in June.
Concern about a global economic slowdown put the S&P 500 last month on the brink of a so-called correction, or a 10 percent decline from a recent peak. The index slumped 3.3 percent in the second-quarter, the biggest retreat since the period ending in September.
“China is slowing, Europe is clearly slowing, how is the U.S. going to avoid sliding into recession again?” said Malcolm Polley, who oversees about $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania. “There’s just not a lot of capacity left to add stimulus.”
Measures of financial and energy shares in the S&P 500 dropped at least 1.2 percent for the biggest declines among 10 groups. JPMorgan tumbled 4.2 percent, the most in the Dow, to $34.38. Bank of America Corp. fell 2.1 percent to $7.89. Anadarko Petroleum, an independent oil and natural-gas producer, slumped 3.2 percent to $66.82.
Target and Macy’s Inc. posted June same-store sales that trailed analysts’ estimates as consumer confidence in the U.S. cooled and retailers focused on clearing inventory before the back-to-school shopping season. Sales at TJX Cos., which owns discount stores T.J. Maxx and Marshalls, and at Limited Brands, the parent company of Victoria’s Secret, beat estimates.
Target, the second-largest U.S. discount chain, lost 1.2 percent to $57.11. Macy’s, the second-biggest U.S. department- store chain, rose 2.6 percent to $34.24. TJX rallied 3.9 percent to $44.14. Limited Brands jumped 5.5 percent to $46.58.
Advanced Micro Devices lost 3 percent to $5.85. The company was downgraded to neutral from buy at Sterne, Agee & Leach by equity analyst Vijay Rakesh. The 12-month share-price estimate is $8.50.