BLBG: U.S. Stocks Fall on Concern Fed Will Fail to Boost Confidence
U.S. stocks fell and the Standard & Poor’s 500 Index declined from its highest level in almost a month on concern the Federal Reserve’s announcement later today will fail to boost confidence in the economy.
Exxon Mobil Corp. slipped 2.3 percent as oil retreated from a three-month high on concern inventories are growing. General Mills Inc., the maker of Cheerios and Hamburger Helper, slid 8.2 percent on earnings that trailed analysts’ estimates. Sun Microsystems Inc. jumped 66 percent, limiting declines in technology shares, as the computer-server maker entered talks to be purchased by International Business Machines Corp.
The S&P 500 dropped 0.8 percent to 772.27 at 10:06 a.m. in New York. Energy shares had the steepest decline among 10 groups. The Dow Jones Industrial Average decreased 82.12 points, or 1.1 percent, to 7,313.58. The Nasdaq Composite Index fell less than 0.1 percent to 1,461.69. About two stocks retreated for each that rose on the New York Stock Exchange.
“Everybody is waiting on the Fed but we’ve been waiting since January for more information and we may or may not get it today,” said Diane Garnick, who helps oversee $500 billion as an investment strategist at Invesco Ltd. in New York. “The bear market rally is over because the economic data continues to get worse. There is no reason for companies to expand their ability to manufacture more goods.”
All Eyes on Fed
Fed policy makers will debate how to provide further stimulus to the shrinking economy, from purchasing more mortgage bonds to buying Treasury securities. They’ll also keep the benchmark interest rate as low as zero percent, according to all 71 forecasters in a Bloomberg News survey. The Open Market Committee is scheduled to issue its statement around 2:15 p.m.
Stocks advanced yesterday, erasing more than half the loss in the S&P 500 since President Barack Obama took office Jan. 20, as a report showed an unexpected rebound in homebuilding. The benchmark index for U.S. equities has rallied 15 percent from a 12-year low on March 9 after Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co. said they were profitable in the first two months of the year.
General Mills lost 8.2 percent to $49.25 after reporting third-quarter profit fell on costs for ingredients and the negative effects of a stronger U.S. dollar. Earnings declined to 79 cents a share excluding gains from an insurance settlement and commodity hedging. Analysts anticipated 87 cents, according to the average of estimates compiled by Bloomberg.
Energy Slump
Exxon Mobil lost $1.61 to $67.48, while Chevron Corp. retreated 99 cents to $64.32. Crude for April delivery fell as much as 1.9 percent to $48.25 a barrel before an Energy Department report likely to show that stockpiles increased because of lower demand.
IBM slipped 3.2 percent to $89.90, while Sun Micro jumped 66 percent $8.26. IBM is in talks to buy Sun, according to a person familiar with the situation. The purchase would help Armonk, New York-based IBM expand in the market for computer servers, which run Web sites and networks, according to the person, who declined to be identified because the talks are confidential.
Arlene Wainstein, a spokeswoman for IBM in Paris, said it’s company policy not to comment on reports. Shabita Wu, a spokeswoman at Sun in Taipei, declined to comment on the report.
Continental Airlines Inc. fell 5.4 percent o $8.27. Revenue for each seat flown a mile has fallen sequentially this year, the airline said. This is in contrast with Delta Air Lines Inc., the world’s largest carrier. Delta President Ed Bastian said “the revenue picture is stabilizing” last week at a transportation conference hosted by JPMorgan.
Nucor Corp. lost 1.3 percent to $33.12. JPMorgan Chase & Co. lowered its 2009 earnings forecast for the largest U.S. steelmaker by market value by 75 percent to 48 cents a share, saying weak volumes will pressure margins. Nucor slumped 9.2 percent yesterday after saying it will post a first-quarter loss because of lower-than-expected demand.
Financial shares fluctuated. The group rallied yesterday, with Citigroup and JPMorgan Chase rising at least 7.7 percent and the KBW Bank Index extending its gain since March 6 to 46 percent.
MetLife Inc. climbed 3.1 percent to $21.84 after Bank of America raised its recommendation on the biggest U.S. life insurer to “buy,” saying in a report “we do not see the need for a large common stock offering.”
The MSCI Asia Pacific Index rose for a fourth day, the longest winning streak since the start of the year, as the Bank of Japan said it will buy more bonds from banks to spur lending. Europe’s Dow Jones Stoxx 600 Index lost 1.2 percent.
The cost of living in the U.S. rose more than forecast in February, led by gains in fuel, clothing and automobile prices.
The consumer price index rose 0.4 percent after a 0.3 percent increase in January, Labor Department figures showed. Excluding food and fuel, the so-called core rate climbed 0.2 percent for a second month.
