Bloomberg News

S&P 500 Posts First Weekly Decline in 2012 Amid Greece Concern

February 12, 2012

Feb. 11 (Bloomberg) -- U.S. stocks declined as concern that Europe’s plan to rescue Greece is unraveling gave the Standard & Poor’s 500 Index its first weekly loss in 2012.

Alcoa Inc. fell 4.4 percent this week and Caterpillar Inc. slumped 1.9 percent, leading losses in the Dow Jones Industrial Average since Feb. 3, as investors sold shares of companies most tied to economic growth. Commodity producers and financial companies had the biggest drop out of 10 groups in the S&P 500. TripAdvisor Inc. lost 15 percent, the largest slump in the S&P 500, after fourth-quarter profit missed analysts’ estimates.

The S&P 500 fell 0.2 percent to 1,342.64 this week. It had advanced five straight weeks, the longest rally in more than a year. The measure is up 6.8 percent this year, the best annual start since 1991. The Dow slumped 61 points, or 0.5 percent, to 12,801.23 this week, pulling back after reaching its highest level since May 2008 on Feb. 9.

“People were thinking the issues in Greece were nearing resolution, and now it looks as far off as ever,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $220 billion. “You still have that uncertainty overhanging the market. People may be taking more of a wait-and-see approach again.”

The S&P 500 erased a weekly gain yesterday after euro-area finance ministers refused to approve a 130 billion-euro ($173 billion) rescue package until Greece backs austerity measures. George Karatzaferis, who leads one of Greece’s coalition parties, said he won’t vote for proposed budget cuts. Concern the European debt crisis would trigger a global recession drove the index down 19 percent between April and October. It has risen 22 percent since then.

Consumer Sentiment

Stocks also retreated yesterday after U.S. consumer confidence decreased more than forecast. The Thomson Reuters/University of Michigan preliminary index of sentiment dropped to 72.5 from 75 in January. The median estimate in a Bloomberg News survey called for 74.8.

The S&P 500 advanced earlier this week amid optimism Greece’s government made progress on measures to secure international aid.

“U.S. stock pickers over the last six to eight weeks have been relatively complacent over what’s going on in Europe,” Komal Sri-Kumar, chief global strategist at Los Angeles-based TCW Group Inc., which manages $120 billion, said in during an interview on “Street Smart” on Bloomberg Television. “There is a significant decline which has to happen.”

100% in Equities

Laurence D. Fink, chief executive of BlackRock Inc., the world’s largest money manager, urged investors earlier this week in Hong Kong to “be 100 percent in equities.” He later said in Beijing his call was aimed at getting cash back into the capital markets.

“It’s important to get cash off the sidelines and back into the markets so people can get the returns they need and we can get our economies moving again,” Fink said in Beijing. His firm manages $3.5 trillion in assets. “Too many people are underweight equities, and one of things I’m trying to do is to get people to think about the opportunities they’re missing, with valuations at these levels.”

Commodity companies in the S&P 500 slumped 2.2 percent as a group, while financial stocks lost 1.2 percent. Alcoa, the largest U.S. aluminum producer, erased 4.4 percent to $10.29 for the biggest Dow loss. Caterpillar, the largest construction and mining-equipment maker, sank 1.9 percent to $111.75.

Travel Recommendations

TripAdvisor declined 15 percent to $30.04 for the biggest drop in the S&P 500. The online travel-recommendation service spun off from Expedia Inc. in December reported fourth-quarter profit excluding some items that missed the average analyst estimate by 21 percent, data compiled by Bloomberg show. At least three analysts downgraded the stock.

Western Union Co. slid 11 percent to $17.59. The world’s largest money-transfer business forecast earnings in 2012 will be no more than $1.75 a share, less than the average analyst estimate of $1.81.

Groupon Inc., the largest daily-deal site, tumbled the most since November after reporting a tax-related fourth-quarter loss that analysts hadn’t predicted. Groupon fell 14 percent to $21.03 after reporting a loss, excluding certain costs, of 2 cents a share. Analysts surveyed by Bloomberg had projected profit of 3 cents.

--With assistance from Rita Nazareth in New York, Sree Vidya Bhaktavatsalam in Boston and Bei Hu and Susan Li in Hong Kong. Editor: Nick Baker

To contact the reporter on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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