U.S. stocks fall amid Japan GDP as investors await retail sales

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.

Rising Valuation

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.”

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