The S&P 500 tumbled as much as 5.3 percent since the Nov. 6 election set the stage for a budget showdown between Obama and House Republicans. Last week it erased that retreat before turning lower in the final two sessions. The Congressional Budget Office says the U.S. will probably tumble back into a recession should lawmakers fail to reach an accord on the more than $600 billion in automatic tax increases and spending cuts scheduled to start Jan. 1.
The budget debate is holding stocks hostage, as chief executive officers prepare to cut capital spending for the first time since 2009 should Obama and Congress fail to reach an accord. Expenditures by S&P 500 companies will fall 1.3 percent in 2013 after three years of growth, according to more than 10,000 analyst estimates compiled by Bloomberg.
Telecommunications companies posted the biggest decline of the 19 industries in the Stoxx 600, falling 1.1 percent as a group. Royal KPN NV tumbled 15 percent, its biggest plunge in more than a decade. The phone operator scrapped its final dividend for 2012 after winning a spectrum auction in the Netherlands. Vodafone Group Plc fell 1.7 percent, Deutsche Telekom AG lost 0.3 percent and Tele2 AB dropped 1 percent. The three also bought frequencies.
Aggreko Plc slumped 22 percent, the most in more than 10 years, after the world’s largest provider of mobile-power supplies said that profit will drop in 2013 and it will make provisions of $85 million for bad debts. Hennes & Mauritz AB gained 3.4 percent after Europe’s second-largest clothing retailer reported better-than-expected November sales.
Telecom and banking stocks are among those being sold today after being “overperformers of last week,” Arnaud Scarpaci, a fund manager at Agilis Gestion SA in Paris, who helps oversee about 60 million euros, said in a telephone interview. “There is no closure on the fiscal cliff.”