U.S. stocks fell, as the Standard & Poor’s 500 Index headed toward its first weekly decline in almost two months, amid concern European leaders aren’t making progress in solving the region’s debt crisis.
Hewlett-Packard Co. dropped 8 percent after forecasting full-year earnings that missed analysts’ estimates as demand slumped. Big Lots Inc. tumbled 24 percent after lowering its annual earnings projection. Boeing Co. retreated 2.7 percent after losing 35 orders for 787-9 planes, the biggest Dreamliner cancellation. Alcoa Inc. erased 2.3 percent, pacing declines among raw-material stocks.
The S&P 500 slumped 0.8 percent to 1,402.37 at 1:59 p.m. in New York. The benchmark index has declined 1.1 percent for the week. The Dow Jones Industrial Average lost 114.19 points, or 0.9 percent, to 13,058.57 today. Trading in S&P 500 companies was 16 percent below the 30-day average at this time of day.
“We’re tipping over into a corrective phase in stocks,” Barry James, who helps oversee $3.3 billion as president of James Investment Research in Xenia, Ohio, said in a telephone interview. “Europe is the key driver in the world right now. European leaders aren’t really addressing the root problems.”
German Chancellor Angela Merkel said Europe is in one of its deepest crises, and while the path to a solution is “arduous,” the euro region will emerge stronger. She hosts French President Francois Hollande as the leaders of Europe’s two biggest economies seek common ground on Greece and the wider debt crisis. Greece’s Prime Minister, Antonis Samaras, will follow Hollande to Berlin tomorrow and travel on to Paris on Aug. 25.
Stocks extended declines after the European Union said it is focused on its aid program for Spain’s banks and hasn’t received a request for a full bailout from the euro-area nation. Earlier, German Finance Minister Wolfgang Schaeuble said that allowing Greece more time to meet its debt obligations would not solve the country’s problems and would increase costs for creditors.
“People aren’t willing to invest,” Stephen Hammers, the chief investment officer at Brentwood, Tennessee-based Compass EMP Funds, which manages about $1 billion in assets, said in a telephone interview. “If Europe gets worse, U.S. investors will see that as a warning sign.”
Investors also watched for signs of future monetary policy. The S&P 500 has rallied 9.7 percent since June 1 on speculation global central banks will take action to stimulate growth. U.S. stocks erased losses yesterday as minutes from the Federal Open Market Committee’s last meeting showed many members judged that more stimulus “would likely be warranted fairly soon.”