U.S. stocks retreated for a second day as investors awaited fourth-quarter earnings reports, while European shares erased earlier gains triggered after economic confidence grew more than forecast. The yen and gold advanced.
The Standard & Poor’s 500 Index slipped 0.3% to 1,457.15 as of 4 p.m. in New York and the Stoxx Europe 600 Index closed down 0.1%, with trading volume 45% higher than the three-month average. The yen appreciated 0.8% vs. the dollar after touching a 2 1/2-year low last week. Sweden’s krona fell after the central bank said the economy is slowing. U.S. Treasuries remained higher after a $32 billion auction. Gold gained for the first time in four days.
Fourth-quarter profit at companies in the S&P 500 probably increased 2.9%, according to analyst estimates compiled by Bloomberg, which would mark the second-slowest quarterly growth since 2009.
“We’re waiting for earnings to come out,” John Manley, who helps oversee about $212 billion as chief equity strategist for Wells Fargo Advantage Funds in New York, said in a telephone interview. “Valuations are far from excessive. Yet we’ve had a strong rally very quickly. Now the market is adjusting.”
The S&P 500 retreated for a second day after reaching a five-year high last week following a budget compromise in Washington that averted most of the so-called fiscal cliff of spending cuts and tax increases.
GameStop Corp., the world’s largest video-game retailer, tumbled after the company narrowed its full-year same-store sales forecast, citing disappointing holiday results. Yum! Brands Inc., owner of the Taco Bell and KFC chains, slid after fourth-quarter same-store sales fell more than projected in China after a government probe into one of its former suppliers hurt demand.
Among European stocks, Debenhams Plc sank 7.7% after the second-largest U.K. department-store chain cut its goal for annual profit-margin growth as it stepped up discounting. Vodafone Group Plc gained 1.7% as the Wall Street Journal reported that Verizon Communications Inc. Chief Executive Officer Lowell McAdam said buying the U.K. company’s stake in their Verizon Wireless joint venture is feasible. TGS Nopec Geophysical ASA rallied 7% as the Norwegian offshore surveyor forecast 2012 revenue that exceeded analysts’ estimates.