U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the sixth time in eight days, as speculation increased that the Federal Reserve will scale back stimulus this year amid signs the global economy is strengthening.
Macy’s Inc. fell 4.4% as the department-store chain cut its profit forecast after weaker-than-estimated quarterly sales. Cree Inc. tumbled 21% after forecasting lower first-quarter profit than analysts had anticipated. Apple Inc. climbed 1.4%, extending a rally after billionaire investor Carl Icahn said yesterday he’s an Apple shareholder.
The S&P 500 fell 0.3% to 1,688.82 at 10:44 a.m. in New York. The benchmark gauge has dropped 1.2% since a record high on Aug. 2. The Dow Jones Industrial Average declined 76.72 points, or 0.5%, to 15,374.29. Trading in S&P 500 stocks was 16% below the 30-day average during this time of day.
“What the market is trying to split here is on Fed tapering,” Douglas Cote, chief market strategist at ING U.S. Investment Management in New York, said in a telephone interview. His firm oversees $190 billion. “The Fed is in a balancing act. Inflation is a proxy for growth. When you have low inflation, it’s not good news for growth. Quantitative easing is creating some excess in the financial system.”
U.S. equities rose yesterday, halting a two-day decline, after Commerce Department data showed retail sales increased 0.2% in July, following a 0.6% gain in June that was larger than previously reported. The index erased earlier losses during the session, extending to a ninth day the trend where it reached its lowest point before noon, data compiled by Bloomberg show.
The S&P 500 has dropped from its record high this month amid growing speculation the Fed will pare stimulus this year as the economy strengthens. The central bank will probably reduce its $85 billion in monthly bond purchases at its meeting on Sept. 17-18, according to 65% of economists surveyed by Bloomberg from Aug. 9 to Aug. 13. In a survey last month, half of economists predicted a reduction at next month’s meeting.
“The U.S. markets are in a limbo at the moment during the summer period,” Didier Duret, chief investment officer for ABN Amro Private Banking, which manages 165 billion euros ($219 billion), said by phone from Amsterdam. “It’s had a great run and volumes aren’t particularly large. Many people are away and, by September, people will start investing with 2014 in mind.”
A report today showed wholesale prices in the U.S. were little changed in July, reflecting the biggest drop in auto costs in four years. The steady reading in the producer price index followed a 0.8% gain in June, a Labor Department report showed today in Washington. The median estimate in a Bloomberg survey of 73 economists projected a 0.3% rise.
Separate data showed the euro area’s economy emerged from a record-long recession in the second quarter, led by Germany and France. Gross domestic product expanded 0.3% after a 0.3% contraction in the first quarter, the European Union’s statistics office said. That exceeded the median estimate of 0.2% growth in a Bloomberg survey of 41 economists.
Macy’s fell 4.4% to $46.37. The department-store chain cuts its full-year profit forecast after “softer than anticipated” sales in the second quarter amid “continuing uncertainty about spending on discretionary items.”
Cree plunged 21% to $60.17. The maker of energy- efficient lighting products predicted earnings in the first quarter will be no more than 41 cents a share, missing the average analyst estimate by 2 cents. The Durham, North Carolina- based company also posted fourth-quarter profit that matched projections and sales that fell short of forecasts.
Apple gained 1.4% to $496.61. Icahn, the billionaire activist investor who has made a career of pushing companies to make changes to boost shares, bought $1 billion worth of stock and wants Apple to allocate $150 billion for a repurchase, said a person with knowledge of his plans who asked not to be named because the investment was made privately.