U.S. stocks declined, erasing an early advance, after partial election results spurred concern about prospects for a stable government in Italy.
Chesapeake Energy Corp. slumped 5.4% after agreeing to sell a stake in an Oklahoma oilfield to China Petrochemical Corp. for less than one-third of its estimated value. ITT Educational Services Inc. tumbled 14% after disclosing that U.S. regulators subpoenaed documents related to private loan programs for its students. Hertz Global Holdings Inc., the largest publicly traded U.S. auto-rental chain, gained 4.2% after projecting profit and sales that beat estimates.
The Standard & Poor’s 500 Index retreated 0.7% to 1,504.31 at 2:52 p.m. New York time, after gaining as much as 0.7% earlier today. The Dow Jones Industrial Average decreased 80.18 points, or 0.6%, to 13,920.39. Trading in S&P 500 companies was in line with the 30-day average at this time of day, according to data compiled by Bloomberg.
“We don’t want to see more chaos out of Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees more than $20 billion. “Any question about whether or not Italy would be committed to austerity measures after the elections gets investors concerned.”
Stocks erased gains on concern Italy may be left with a hung parliament as partial election results suggested Silvio Berlusconi may have built a blocking minority in the Senate to deny victory to Pier Luigi Bersani. Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti. Bets Japan’s Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus pushed stocks higher earlier today.
This week’s March 1 deadline to avoid automatic U.S. spending cuts may get investors’ attention. It marks another fiscal showdown between President Barack Obama and congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.
The S&P 500 has gained 5.4% this year as U.S. lawmakers agreed on a compromise on taxes in January and amid better-than-estimated corporate earnings. About 75% of the S&P 500 companies that have released quarterly results beat profit estimates, according to data compiled by Bloomberg. The index trades at 14.9 times reported earnings, below the average since 1954 of 16.4.