BLBG: U.S. Stocks Fall Amid Draghi Comments, Economic Reports
U.S. stocks fell, after a two-day advance in the Standard & Poor’s 500 Index, as investors weighed economic reports and comments by European Central Bank President Mario Draghi.
Sprint Nextel Corp. slid 0.2 percent as the third-largest U.S. wireless carrier reported a drop in monthly contract subscribers. News Corp. retreated 2.1 percent after cutting its profit forecast because of declining ratings for shows such as “American Idol” and “X Factor.” Yahoo! Inc., the biggest U.S. Web portal, climbed 1.7 percent as Pivotal Research Group LLC. raised its recommendation on the shares.
The S&P 500 dropped 0.2 percent to 1,509.04 at 9:55 a.m. in New York. The benchmark gauge rose 0.1 percent yesterday as companies reported better-than-estimated earnings. The Dow Jones Industrial Average lost 36.15 points, or 0.3 percent, to 13,950.37 today. Trading in S&P 500 companies was 11 percent above the 30-day average at this time of day.
“We’re in a digestion stage right now, which is probably healthy,” Hank Smith, who helps oversee $6.5 billion as chief investment officer of Haverford Trust Co. in Radnor, Pennsylvania, said in a phone interview. “We look at the trend in economic improvement, which has been positive. There’s no reason why equities can’t have similar returns in 2013 as they did in 2012.”
Draghi said an economic recovery should begin later this year as an absence of inflation risks allows the ECB to maintain record-low interest rates.
‘Gradually Recover’
“Later in 2013, economic activity should gradually recover, supported by our accommodative policy stance,” Draghi said at a press conference in Frankfurt after policy makers kept the benchmark rate at 0.75 percent. Inflation risks are contained, allowing the ECB’s policy “to remain accommodative,” and economic weakness will prevail only “in the early part” of this year, he said.
Applications for jobless benefits dropped 5,000 to 366,000 in the week ended Feb. 2, Labor Department figures showed today. Economists forecast 360,000 claims, according to the median of 53 estimates in a Bloomberg survey.
Productivity, the measure of employee output per hour decreased at a 2 percent annual rate, the worst performance in almost two years, after a 3.2 percent gain in the prior three months, a Labor Department report. The median forecast in a Bloomberg survey of 63 economists called for a 1.4 percent drop. Expenses per worker increased at a 4.5 percent rate, more than estimated.
‘Frustrating’
“It’s frustrating not to see the employment number improving more than it is, but at least it’s heading in the right direction,” Jeffrey Davis, chief investment officer at Boston-based Lee Munder Capital Group, said in a telephone interview. His firm oversees $5 billion. “There’s pretty good momentum in the market. I don’t think it will be disrupted by these numbers.”
The S&P 500 has rallied 6 percent in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than- estimated earnings. The benchmark equity gauge is 3.4 percent below its record high reached in October 2007. It has more than doubled since bottoming in March 2009 as the Federal Reserve conducted three rounds of bond-buying to lower interest rates and boost economic growth.
Sprint Slips
Sprint dropped 0.2 percent to $5.76 after the number of monthly contract subscribers fell by 243,000 in the fourth quarter. Analysts expected a subscriber loss of almost 206,000, according to an average of eight estimates compiled by Bloomberg.
The company reported higher revenue and a slightly narrower loss than analysts had estimated in fourth-quarter earnings. Sprint expects to complete a deal by mid-year with Tokyo-based Softbank, which agreed to buy a 70-percent stake of the wireless carrier for $20 billion.
News Corp. declined 2.1 percent to $27.63. The media company said operating income will grow by a “mid-to high- single-digit” percentage for the fiscal year ending in June, down from an earlier forecast of growth that could exceed 10 percent.
Prudential Financial Inc., the No. 2 U.S. life insurer, dropped 2.9 percent to $56.80 after posting a fourth-quarter loss on costs tied to fluctuation of currencies including the yen, which tumbled versus the dollar in the fourth quarter.
Yelp Inc. tumbled 9.3 percent to $20.30. The website that lets consumers review local businesses reported a wider fourth- quarter loss than analysts estimated as it boosted spending on expansion into new markets.
Yahoo, Apple
Yahoo added 1.7 percent to $20.19 after the stock was raised to buy from hold at Pivotal Research by equity analyst Brian Wieser. The 12-month target price is $23.00 per share.
Apple Inc. rallied 1 percent to $459.11. Greenlight Capital Inc., David Einhorn’s New York-based hedge fund, urged shareholders to reject a proposal from the iPhone maker which would eliminate preferred stock from Apple’s charter, saying it would restrict the board’s ability to unlock value. Einhorn also told CNBC his firm owns more Apple stock than ever.
To contact the reporters on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net; Leslie Picker in New York at lpicker2@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
