U.S. stocks fell, following the biggest three-day rally for the Standard & Poor’s 500 Index since 2009, as slower-than-estimated growth in Europe offset the strongest gain this year for American industrial production.
Alcoa Inc. (AA), Boeing Co. (BA) and Hewlett-Packard Co. (HPQ) dropped at least 1.1 percent, pacing losses in companies most-tied to the global economy. Freeport-McMoRan Copper & Gold Inc. (FCX) declined 1.5 percent as commodity prices sank. Citigroup Inc. (C) and Bank of America Corp. (BAC) retreated more than 1.7 percent after billionaire John Paulson reduced his positions in both lenders last quarter as financial shares slumped.
The S&P 500 fell 0.9 percent to 1,194.03 at 9:37 a.m. in New York. The benchmark gauge for American equities advanced 2.2 percent yesterday, erasing last week’s drop. The Dow Jones Industrial Average slid 69.32 points, or 0.6 percent, to 11,413.58 today.
“People are desperate for stability in unpredictable times," Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc., which oversees $4 billion, said in a telephone interview. ‘‘People are flocking to safety. We have tepid economic growth, volatile commodity prices. The economy and consumers are not as strong as people thought regardless of how bad they wanted the market to go up. Europe is a mess. There’s no easy answer on how to get economic growth going again.’’
The S&P 500 has fallen as much as 18 percent since April 29 on concern about Europe’s debt crisis, S&P’s downgrade of the U.S. credit rating and as reports on manufacturing and consumer spending showed the world’s largest economy is slowing. The index rallied 7.5 percent over the last three days amid a decline in jobless claims, an increase in retail sales and corporate takeovers.
Global Stocks Sink
Global stocks slumped today as a report showed that European economic growth slowed more than economists forecast in the second quarter as Germany’s recovery almost ground to a halt amid the worsening sovereign-debt crisis.
Gross domestic product in the 17-nation euro area rose 0.2 percent from the first quarter, when it increased 0.8 percent, the European Union’s statistics office in Luxembourg said in a statement today. That’s the worst performance since the euro region emerged from a recession in late 2009. Economists had forecast the economy to expand 0.3 percent, according to the median of 34 estimates in a Bloomberg News survey. GDP rose 1.7 percent from a year earlier.
Industrial Production
Stocks pared gains after a report showed industrial production in the U.S. climbed in July by the most this year, as carmakers started to shake off the effects of the disaster in Japan and higher temperatures boosted utility use.
The 0.9 percent increase in production at factories, mines and utilities followed a revised 0.4 percent gain that was more the previously estimated, figures from the Federal Reserve showed today. Economists projected a 0.5 percent rise in July, according to the median estimate in a Bloomberg News survey. Factory output rose by the most in four months.
A separate report showed that builders began work on fewer homes in July, indicating residential real estate is failing to contribute to U.S. growth two years into an economic recovery. Housing starts fell 1.5 percent to a 604,000 annual rate, in line with the median forecast of economists surveyed by Bloomberg News, from June’s 613,000 pace that was less than previously estimated, Commerce Department figures showed today in Washington.
Caterpillar, Boeing Fall
Companies which are most-tied to economic activity slumped. Alcoa decreased 2 percent to $12.31. Boeing dropped 1.8 percent to $61.59. Hewlett-Packard fell 1.1 percent to $32.07.
Some energy and raw-material producers also slumped as oil and copper retreated. Freeport-McMoRan, the world’s largest publicly traded copper producer, declined 1.5 percent to $46. Exxon Mobil Corp. (XOM) fell 1.6 percent to $73.14.
Bank of America sank 1.7 percent to $7.63, while Citigroup declined 2.8 percent to $30.40. Paulson & Co. sold 7.8 million shares of New York-based Citigroup, leaving the fund with 33.5 million shares as of June 30, according to a filing yesterday with the U.S. Securities and Exchange Commission. The fund sold 63.2 million shares of Charlotte, North Carolina-based Bank of America, leaving it with 60.4 million, according to the filing.
Wal-Mart Stores Inc. (WMT) gained 2.4 percent to $51.19. The world’s largest retailer boosted its profit forecast for the year after second-quarter earnings rose and the Sam’s Club wholesale chain helped the company halt a decline in sales at its U.S. stores.
Home Depot Inc. (HD) added 5.2 percent to $33.11. The largest U.S. home improvement retailer raised its full-year profit forecast after second-quarter profit exceeded analysts’ estimates, spurred by increased traffic and spending by customers.
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