“The main theme is still the euro crisis and a lot expect that there will be an economic slowdown in the next few months,” said Thomas Muhlberger, a fund manager who helps oversee the equivalent of $1.7 billion at Johannes Fuhr Asset Management in Frankfurt. “Some see this as increasing the likelihood of more liquidity coming into the markets from central banks.”
The S&P 500 last week closed at the highest level since January 2008 after the European Central Bank announced plans to buy bonds of indebted countries to combat the debt crisis. Technology and financial shares led losses among the index’s 10 main industry groups today.
Bank of America Corp. lost 2.5 percent and JPMorgan Chase & Co. fell 1.4 percent to pace losses in 20 of 24 stocks in the KBW Bank Index. New regulations and capital requirements are “structural” changes to the banking industry that are more to blame for declining profits than the U.S. economic slump, Goldman Sachs Group Inc. analysts said in a report today.
Intel, International Paper
Intel Corp. lost 3.8 percent after Nomura Holdings Inc. said estimates for the largest chipmaker’s earnings next year may fall further. International Paper Co. slid 4.2 percent after Deutsche Bank AG cut its rating to hold from buy, saying expected price increases may not be likely.
American International Group Inc. dropped 2 percent after the U.S. Treasury offered to sell $18 billion in AIG shares, with the bailed-out insurer planning to buy back as much as $5 billion.
A deal by U.S. lawmakers to head off automatic tax increases and spending cuts at the start of next year may be “messy” and could hurt stocks, Goldman Sachs Group Inc.’s chief U.S. equity strategist David Kostin said. The so-called fiscal cliff “is unlikely to be resolved in a smooth fashion, and probably will be resolved in a messy way,” Kostin said today at a conference in San Diego sponsored by the Insured Retirement Institute.
Kostin has the second-most bearish view of stock-market performance this year among Wall Street strategists tracked by Bloomberg. He estimates that S&P 500 will finish 2012 at 1,250, 13 percent below its close of 1437.92 on Sept. 7. The median estimate is 1,425.
Gamco Investors Inc. fund manager Howard Ward predicted U.S. stocks may climb to records in three to four months amid strong corporate earnings and further monetary easing by the Federal Reserve, he said in an interview on Bloomberg Television. U.S. stocks will surge 12 percent through the end of 2013, driving the S&P 500 to a record, as an improvement in capital investment and industrial production boost earnings, Citigroup Inc. said.
The S&P 500 will climb to 1,615 by the end of 2013, according to a report dated Sept. 7 from Tobias Levkovich, the chief U.S. strategist at the bank. That would surpass its current all-time high of 1,565.15 reached Oct. 9, 2007.
“Attractive valuation, credit dynamics and implied earnings growth all support market appreciation even as sentiment is not as constructive,” Levkovich wrote in the report. “Economic and earnings expansion is likely even as margin concerns persist.”
The euro weakened against 10 of its 16 major counterparts, losing 0.4 percent versus the yen. Norway’s krone dropped versus all its main peers after a report showed inflation slowed in August.