Stocks drop with oil as dollar rebounds on global growth concern

U.S. stocks sank, sending the Standard & Poor’s 500 Index to its biggest loss in three months, amid concern that global stimulus measures won’t be enough to boost growth. Oil fell and the dollar reversed earlier losses.

The S&P 500 slid 1.1 percent to 1,441.59 at 4 p.m. in New York, erasing an early advance of 0.4 percent. Oil retreated 0.6 percent to a seven-week low of $91.37 a barrel. The Dollar Index, a gauge of the currency against six major peers, rose 0.2 percent to 79.664 after retreating 0.2 percent earlier. Ten-year Treasury yields fell four basis points 1.67 percent after earlier rising two points.

U.S. equities turned lower after the S&P 500 rose as high as 1,463.24, within three points of its best closing level since December 2007. Federal Reserve Bank of Philadelphia President Charles Plosser said the new bond-buying plan announced by the Fed this month probably won’t boost growth or hiring and may jeopardize the central bank’s credibility. Equities rallied in morning trading as reports on consumer confidence and home prices topped economists’ estimates.

“Things won’t get better as fast as people think they will,” Malcolm Polley, who manages $1.1 billion as chief investment officer at Stewart Capital in Indiana, Pennsylvania, said by phone. “The Fed’s actions are not going to lead to higher growth.”

Caterpillar Inc. sank more than 4 percent to lead losses in the Dow Jones Industrial Average after the world’s biggest maker of construction and mining equipment cut its forecast for 2015 earnings. Staples Inc., the largest U.S. office supplies chain, dropped 4.5 percent on plans to close stores. Red Hat Inc. retreated 4.3 percent after the largest seller of the open- source Linux operating system reported profit that missed analysts’ estimates and pared its sales forecasts.

Confidence, Housing

Stocks started the session higher after the Conference Board’s sentiment index increased to 70.3 this month from 61.3 in August, exceeding the most optimistic projection of economists in a Bloomberg survey. The S&P/Case-Shiller index of property values in 20 cities increased 1.2 percent from July 2011, the biggest 12-month advance since August 2010. The median forecast of 24 economists surveyed by Bloomberg called for a 1.05 percent gain.

The S&P 500 has erased almost all its gains since the Federal Open Market Committee said Sept. 13 that it will undertake a third round of quantitative easing by purchasing mortgage-backed securities at a pace of $40 billion per month until labor markets “improve substantially.” Policy makers are using unconventional tools to attack a jobless rate stuck above 8 percent since February 2009.

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