U.S. stocks fell, sending the Standard & Poor’s 500 Index to a six-week low, as earnings from UnitedHealth Group Inc. to EBay Inc. disappointed investors.
UnitedHealth slumped 3.7%, the most in three months. EBay slid 5.6% after reporting revenue that missed some estimates. Morgan Stanley lost 4.6% after posting the biggest drop in trading revenue among the largest U.S. banks. Verizon Communications Inc. gained 3.1% as growth in wireless customers helped profit beat estimates, while PepsiCo Inc. added 2.8% after snack sales increased.
The S&P 500 fell 0.6% to 1,543.21 at 3:33 p.m. in New York, the lowest level since March 6. The Dow Jones Industrial Average slipped 94.97 points, or 0.7% to 14,523.62. The Nasdaq Composite Index dropped 1.5% for the biggest two-day slump in five months. Trading in S&P 500 stocks was 19% higher than the 30-day average at this time of day.
“We’ve come to a period of negative economic surprises,” Mark Luschini, the chief investment strategist at Janey Montgomery Scott LLC, which manages $55 billion, said in a phone interview. “Whether it’s a pullback or a corrective phase, I think it’ll just be a pause because I don’t think the fundamental underpinnings are deteriorating more.”
Stocks kept losses after a measure of manufacturing in the Philadelphia region expanded at a slower pace and the index of U.S. leading indicators unexpectedly declined for the first time in seven months. The S&P 500 fell below its 50-day moving average for the first time this year. That level, currently at around 1543, is watched by some analysts to gauge the trend of the market.
The S&P 500 has dropped 3.1% since reaching an all- time high of 1,593.37 on April 11, as China’s economic growth unexpectedly slowed, commodities tumbled and data on U.S. employment and retail sales missed forecasts.
Almost 30 companies in the S&P 500 are scheduled to post results today. Of the 82 that have reported since the season began, 74% have beaten analysts’ estimates for profit and 49% have exceeded sales forecasts, according to data compiled by Bloomberg. Analysts project first-quarter results dropped 1.4%, the first contraction since 2009.
Seven out of the 10 main S&P 500 industries declined today as technology, health-care and consumer-discretionary companies fell the most, sinking at least 1.4%.
The Chicago Board Options Exchange Volatility Index, or VIX, increased 7.4% to 17.73. The gauge briefly erased losses for the year after climbing as much as 10%. The VIX, which moves in the opposite direction to the S&P 500 about 80% of the time, reached a six-year low in March and has since risen 60%.
“When we were heading into this earnings season, the estimates had come down, but the S&P itself was still in a situation where sentiment was high and correcting,” Sam Turner, a fund manager with Richmond, Virginia-based Riverfront Investment Group LLC, said in the phone interview. His firm manages $3.7 billion. “That can play itself out with a consolidation.”
UnitedHealth dropped 3.7% to $59.73. The biggest U.S. health insurer reported higher costs for patients on Medicare, the U.S.-funded program for the elderly, and trimmed its full-year revenue forecast by about $2 billion because a private employer converted to a less-profitable contract.
Humana Inc., the second-largest Medicare insurer, slipped 3.1% to $72.26. Health-care companies in the S&P 500 fell 1.4% as a group.
EBay slumped 5.6% to $52.97. The operator of the largest Internet marketplace said first-quarter sales amounted to $3.75 billion, missing the average analyst estimate. Second- quarter revenue will be $3.8 billion to $3.9 billion, lower than the average projection for $3.95 billion, the company said.
“The market was more ripe for hiccups and we’re seeing it,” David Sowerby, who helps oversee about $185 billion at Loomis Sayles & Co. in Bloomfield Hills, Michigan, said by phone. “We had a long run. Sentiment got more bearish and the earnings season has been a series of C plus.”
The Nasdaq Composite Index tumbled to the lowest level since February. SanDisk Corp., a maker of flash memory for mobile devices, fell 7.7% to $51.46. The company said it isn’t increasing spending on new plants and equipment and doesn’t expect enough output to meet all of the orders it receives this year.
Apple Inc. dropped 3% to a 16-month low of $390.59. The stock has slumped 27% this year, underscoring concern among investors about Chief Executive Officer Tim Cook’s plans for future products in an industry crowded with rivals such as Samsung Electronics Co., Google Inc. and Amazon.com Inc.
Morgan Stanley fell 4.6% to $20.49. Bond-trading revenue plunged 42% in the first quarter and stock- trading revenue declined 19%, the company said.
Bank of America Corp. dropped 3.3% to $11.31, extending a 4.7 slump from yesterday, when the lender reported profit that missed analysts’ projections.
Philip Morris International Inc. slipped 2.6% to $91.64. The world’s largest publicly traded tobacco company posted earnings that fell more than analysts estimated as tax increases and economic weakness hurt shipments.
Verizon climbed 3.1% to an almost 12-year high of $51.06. The second-largest U.S. phone company exceeded analysts’ profit estimates after attracting more wireless customers and getting them to sign up for lucrative data contracts.
PepsiCo jumped 2.8% to a record $81.05. The world’s largest snack-food maker posted earnings that beat the average analyst estimate after global snack sales increased.
Union Pacific Corp. advanced 4% to $142.44, an all- time high. The biggest U.S. railroad reported profit that topped analysts’ estimates as higher pricing overpowered a decline in cargoes.
Peabody Energy Corp. rallied 7.4%, the most in the S&P 500, to $20.43. The largest U.S. coal company reported a loss that was narrower than expected as U.S. demand for coal used to make electricity rose.
American Express Co. added 1.4% to $65.01. The biggest U.S. credit-card issuer by customer spending reported profit that exceeded analysts’ estimates as consumers boosted purchases.