U.S. stocks fell, sending the Standard & Poor’s 500 Index to its fifth drop in six sessions, as data showed a slowdown in Japan’s economic growth and investors awaited tomorrow’s report on America’s retail sales.
Tesla Motors Inc. declined 5.5% as Lazard Capital Markets LLC downgraded the carmaker’s shares. Sysco Corp. fell 5.3% after results missed analysts’ estimates. Apple Inc. advanced 3% after winning a patent-infringement battle against Samsung Electronics Co. BlackBerry Ltd. rallied 12% as the company’s board said it is exploring alternatives, including a possible sale.
The S&P 500 fell 0.2% to 1,687.87 at 3:09 p.m. in New York, extending its loss from a record high to 1.3%. The Dow Jones Industrial Average declined 18.53 points, or 0.1%, to 15,406.98. Trading in S&P 500 stocks was 19% below the 30-day average at this time of day.
“We have growth frustratingly low offset by discount rates that are unnaturally low,” Joe Costigan, director of equity research at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. His firm oversees $6.7 billion. “As long as that’s the case, the market will stay locked at least into September and you’ll see days like this with low volume and really not a lot of conviction.”
The S&P 500 declined 1.1% last week, its biggest drop in seven weeks, and the Dow dropped 1.5% in the previous five days, snapping a string of six weekly advances, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens.
The S&P 500 has rallied 18% so far in 2013 and closed at a record 1,709.67 on Aug. 2. The index is trading at 15.3 times projected earnings, up from 13.1 times on the first trading day of this year. That compares with a five-year average of 13.9 times, data compiled by Bloomberg show.
Better-than-estimated corporate earnings and central bank stimulus, including record-low borrowing rates, have helped equities rally, with the S&P 500 surging more than 150% from its bear-market low in 2009.
Of the 450 companies in the S&P 500 that have reported quarterly results this period, 72% have exceeded analysts’ profit estimates, with earnings rising 2.8%, data compiled by Bloomberg show.
“We’ve seen a rally with a multiple expansion and not necessarily earnings growth,” Jeff Schwarte, a money manager who helps oversee about $290 billion in Des Moines, Iowa, at Principal Global Investors, said by phone. “We need to see earnings, we need to see some resolution on tapering.”
Investors have been scrutinizing economic data to determine whether growth is strong enough for the Fed to curtail its monthly bond buying. A Commerce Department report tomorrow will show that retail sales rose for a fourth consecutive month in July, economists surveyed by Bloomberg predicted. A Fed release on Aug. 15 may show factories, mines and utilities increased their output in July. On Aug. 16, reports will probably show that housing starts and building permits rebounded last month.
In Asia, government reports showed Japan’s gross domestic product growth slowed from the first quarter to a pace below economists’ forecasts while Chinese factor production increased a higher-than-expected 9.7% in July.
Stock swings have narrowed. The S&P 500’s average intraday price changes averaged about 0.7% over the past 30 days, the smallest fluctuation since a comparable period ended Feb. 21, data compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, or VIX, retreated 2.3% to 13.10. The equity volatility gauge reached its 2013 peak in June and has since dropped 36%.
Seven of 10 main groups in the S&P 500 fell today, with utility and energy stocks sinking at least 0.7% to lead the retreat.
JPMorgan Chase & Co. lost 0.9% to $54.04, the stock’s seventh straight decline. Prosecutors are weighing penalties for the bank, including a fine and a reprimand, related to allegations staff tried to conceal losses last year, the New York Times reported. The U.S. may announce charges as early as this week against former London-based employees, a person familiar with the matter said.
Tesla slumped 5.5% to $144.52. Investors are pricing in the company’s development into a successful premium manufacturer similar to Porsche Automobil Holding SE over the next decade, and any “execution issues” with its electric car models could send the shares down to $100, Aditya Satghare, an analyst with Lazard, wrote in a note to clients.
Sysco fell 5.3%, the most in the S&P 500, to $33.17. The food distributor said it will not meet its fiscal 2015 earnings forecast as weak restaurant traffic hurt profit.
Apple advanced 3% to $468.02, on track to snap a four-day losing streak. The U.S. International Trade Commission on Aug. 9 said Samsung Electronics infringed two Apple patents and issued an order banning imports of products using the iPhone maker’s multitouch features and headphone jack detection.
F5 Networks Inc. gained 3.5% to $93.06. Barclays Plc analyst Ben Reitzes upgraded the Internet software provider to overweight from equalweight, citing improved prospects in the company’s networking business and “significant” opportunities to provide security solutions.
BlackBerry jumped 12%, the most since March 11, to $10.92. The mobile device maker said it has formed a special committee to explore options including a sale of the company or a joint venture. Its shares slumped 18% this year through the end of last week.
Newmont Mining Corp., the world’s second-biggest gold producer, gained 5.5% to $31.13 for the largest increase in the S&P 500, as the precious metal rose the most in three weeks. Barrick Gold Corp, Newmont Mining’s bigger rival, added 5.1% to $18.30.