S&P 500 drops from record as Treasuries, gold gain

U.S. stocks fell, snapping a streak of rallies on the first session of the year since 2009, as investors sold shares following the best annual gain since 1997. Treasuries and gold climbed, while oil prices tumbled.

The Standard & Poor’s 500 Index (CME:SPH14) fell 0.9% from a record as of 3:06 p.m. in New York and the Stoxx Europe 600 Index slid 0.7%. Ten-year Italian yields reached the lowest level since May. The MSCI Emerging Markets Index retreated 1.2% as Chinese manufacturing slowed. Turkey’s lira slid to a record per dollar. Gold (COMEX:GCG14) jumped 1.9% after losing 28% last year, while crude slumped 3%, the most in 14 months. Ten-year Treasury yields fell five basis points to 2.99% after touching 3.05%, the highest since 2011.

About $9.6 trillion was added to the value of global stocks last year, the most in four years, data compiled by Bloomberg show. The first trading session of January had proven profitable for investors over the previous five years, with the S&P 500 gaining an average of almost 2% that day since 2009, according to data compiled by Bloomberg.

“Stocks and the market in general are elevated so heavily, so there’s always a risk in the company outlooks,” Walter Todd, who oversees about $950 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a telephone interview. “I don’t think this sell-off will be a trend. In fact, I would expect the market to trade up into earnings season and January.”

Reports today confirmed factory output in the euro area expanded last month at the fastest pace since May 2011 as Italy’s manufacturing beat estimates and German production grew for a sixth month. U.S. jobless claims declined last week to the lowest level in a month while the Institute for Supply Management’s manufacturing index declined less than forecast.

New Year

The S&P 500 rallied 30% in 2013 to close at an all- time high of 1,848.36 on Dec. 31. The advance sent the benchmark index’s valuation to 17.4 times reported earnings, the highest since 2010.

All 10 main S&P 500 groups retreated at least 0.6% today, with energy shares dropping 1.5% for the biggest decline. Exxon Mobil Corp. slid 1.6%.

Coca-Cola Co., General Electric Co. and DuPont Co. tumbled at least 1.7% to lead declines in the Dow Jones Industrial Average after the 30-stock gauge jumped 27% in 2013 for its biggest gain since 1995.

Apple Inc. fell 1.5 after Wells Fargo & Co. downgraded the stock and said profit margins may come under pressure later in the year with the iPhone 6 cycle. Newmont Mining Corp. advanced 4.5% as gold rose.

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