U.S. Stocks Decline as Utilities Slump Amid Consumer Price Data

 

Bloomberg
 

(Bloomberg) — U.S. stocks fell, with the Standard & Poor’s 500 Index dropping for a second day, as a report on consumer prices showed signs inflation is perking up.

Utilities slid 1.2 percent. Bristol-Myers Squibb Co. and Biogen Inc. lost more than 2.3 percent, leading declines in health-care companies. Genworth Financial Inc. and Legg Mason Inc. fell at least 1.7 percent. Google Inc. and Netflix Inc. rose more than 2 percent.

The S&P 500 slipped 0.6 percent to 2,091.50 at 4 p.m. in New York. The Nasdaq Composite Index declined 0.3 percent to close 1 percent below its record set in 2000. The Dow Jones Industrial Average lost 104.90 points, or 0.6 percent to 18,011.14. About 5.8 billion shares changed hands on U.S. exchanges today, 13 percent below the three-month average.

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“The market is looking for new direction, but it hasn’t seen it yet,” Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates in Bethlehem, Pennsylvania, said in a phone interview. “That’s why we’re churning and trading in a pretty narrow range.”

The S&P 500 and Dow had earlier risen to within 1 percent of records they reached on March 2. The S&P 500 has gone 25 consecutive sessions without back-to-back advances, the longest since a 25-day stretch in 2001.

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Fed Commentary

Fed Chair Janet Yellen and her colleagues last week opened the door to an interest-rate increase as soon as June, while indicating in their forecasts they’ll go slow once they start.

San Francisco Fed President John Williams said in remarks prepared for delivery in Sydney Tuesday that a discussion should happen mid-year about tightening policy, even as he lowered his growth forecast.

Economists surveyed by Bloomberg forecast the world largest economy expanded at a rate of 2.2 percent in the first quarter and the pace to pick up to 3 percent in the second three months.

 

Data today showed the cost of living in the U.S. excluding food and fuel rose more than forecast in February, reflecting broad-based gains that helped keep a floor under inflation.

The so-called core consumer-price index climbed 0.2 percent for a second month, a Labor Department report showed Tuesday in Washington. A broader measure of prices overall also climbed 0.2 percent, the first advance in four months, as fuel costs stabilized.

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Purchases of new homes in the U.S. unexpectedly rose in February to a seven-year high as stronger job gains helped bolster industry activity amid severe weather. Sales climbed 7.8 percent to a 539,000 annualized pace, the most since February 2008.

Gains Erased

The S&P 500 earlier rose as much 0.2 percent before retreating in afternoon trading to cap a second day of losses. In a repeat of Monday’s trading, selling accelerated into the close and the index ended at its low for the session. The Nasdaq Composite jumped 0.4 percent to within 20 points of its all-time high before giving back the gains to end at its low for the day.

The Nasdaq index has rebounded 3 percent since March 11. It crossed 5,000 earlier this month before losing 3.2 percent in nine days.

Health-care stocks have bolstered the rally as the Nasdaq Biotechnology Index rose 6.2 percent to a record last week. The index is down 2.9 percent since Friday, its biggest two-day drop in three months.

Google climbed 2.2 percent Tuesday after saying it hired Ruth Porat, Morgan Stanley’s chief financial officer, to succeed Patrick Pichette as its new CFO in May. Netflix increased 3.1 percent, the most since Feb. 3, after analysts from Cantor Fitzgerald LP and Barclays Plc boosted their ratings on the company.

EA, Facebook

Electronic Arts Inc. and EBay Inc. added more than 1.2 percent, while Facebook Inc. advanced 1 percent. The social networking company extended its winning streak to seven days, its longest since July 2013. Twitter Inc. jumped 6.2 percent to its highest since October.

The Chicago Board Options Exchange Volatility Index rose 1.6 percent to 13.62. The gauge, know as the VIX, fell 19 percent last week, its biggest five-day decline since January.

All of the S&P 500’s 10 main groups fell, led by utilities, health-care and financial shares.

Asset managers Legg Mason and Franklin Resources Inc. slipped more than 1.6 percent. Progressive Corp. fell 1.3 percent after saying it will begin increasing rates for some risky customers who participate in a program that allows the company to electronically monitor driving habits.

The Dow Jones Transportation Average decreased for a second straight day, falling 0.7 percent. The drop was paced by Delta Air Lines Inc. and Southwest Airlines Co., which slipped more than 1.1 percent, pushing the Bloomberg U.S. Airlines Index down 0.7 percent.

Whiting Plunges

S&P 500 energy companies slid 0.8 percent as Diamond Offshore Drilling Inc. lost 4.7 percent. Oil services companies Noble Corp. and Tesoro Corp. slipped more than 2.2 percent.

Whiting Petroleum Corp. plummeted 19 percent, the most since November, after giving up on finding a buyer and instead selling shares and raising debt to clean up its balance sheet. The largest oil producer in North Dakota’s Bakken shale region is tapping capital markets after shopping itself to Exxon Mobil Corp. and at least three other companies, according to people familiar with the matter.

Freeport-McMoRan Inc. slid 0.8 percent. The world’s largest publicly traded copper producer cut its dividend by 84 cents as it tries to fund mining and energy projects in the face of lower commodity prices.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.netJohn Shipman

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