U.S. stocks fell, sending the Standard & Poor’s 500 Index to its biggest loss since November 2011, as global equities tumbled after the Federal Reserve said it may phase out stimulus and China’s cash crunch worsened.
All 10 groups in the S&P 500 declined at least 2.2 percent, as consumer, utility and energy shares led losses. Newmont Mining Corp. dropped 6.7 percent as gold plunged to the lowest in more than 2 1/2 years. An index of homebuilders fell the most in a year, as PulteGroup Inc. (PHM) and D.R. Horton Inc. each tumbled 9.1 percent.
The S&P 500 sank 2.5 percent to 1,588.19 in New York. The benchmark index tumbled 3.9 percent over two days. The Dow Jones Industrial Average (INDU) erased 353.87 points, or 2.3 percent, to 14,758.32. The gauge dropped the most since November. About 9.3 billion shares traded hands on U.S. exchanges, 50 percent more than the three-month average and the highest volume of the year.
“It’s been so violent that it puts people on the sidelines,” James Paulsen, the Minneapolis-based chief investment strategist at Wells Capital Management, which oversees more than $340 billion, said by telephone. “The buyers are saying ‘I’m going to wait and see.’ They’re not running to the exits but they’re also not willing to catch a falling knife.”
The MSCI All-Country World Index slipped 3.4 percent today, the most in 19 months, as Asian stocks tumbled 4.1 percent and European shares retreated 3 percent, the biggest losses for both regions since 2011. China’s benchmark money-market rates climbed to records as the central bank refrained from using reverse-repurchase agreements to address a cash crunch in the world’s second-biggest economy.
The S&P 500 fell 1.4 percent yesterday after Fed Chairman Ben S. Bernanke said the central bank may end bond purchases by the middle of next year if the U.S. economy improves in line with Fed projections. His speech followed a two-day Federal Open Market Committee meeting in Washington.
Bernanke will cut the Fed’s $85 billion in monthly bond purchases by $20 billion at the Sept. 17-18 policy meeting, according to 44 percent of economists in a Bloomberg survey. In a June 4-5 survey, only 27 percent of economists forecast tapering would start in September.
The S&P 500 has plunged 4.9 percent since May 21, trimming its year-to-date gain to 11 percent, amid concern the Fed will scale back its stimulus efforts.
The index has rallied 148 days without a retreat exceeding 5 percent or more, data compiled by Bloomberg show. Last year, the index dropped 7.7 percent from a Sept. 14 peak through Nov. 15. The current advance is the longest without a 5 percent drop since a 173-day stretch ended Feb. 20, 2007, about eight months before the financial crisis sent the market plunging 57 percent.
The S&P 500’s 2.6 percent decline in June threatens to end seven straight monthly gains through May, the longest winning streak since September 2009. The gauge rallied as much as 147 percent from its bear market low in 2009, fueled by better-than-estimated corporate earnings and the Fed’s record-low interest rates and bond purchases.
Data today showed sales of previously owned U.S. homes climbed more than forecast in May to the highest level since November 2009, and the Fed Bank of Philadelphia’s general economic index increased. Another report showed more Americans than forecast filed applications for unemployment benefits, while an index of U.S. leading indicators rose less than projected in May.
The market “feels like Bernanke will be there forever with the safety net and it’s just not true,” Uri Landesman, president of New York-based hedge fund Platinum Partners, which manages about $1.2 billion, said by phone. “There’s going to be a period of disappointment about that across asset classes.” He said, “We’re going to have a very volatile second half of 2013.”
The Chicago Board Options Exchange Volatility Index, or VIX (VIX), rallied 23 percent to 20.49, climbing above 20 for the first time this year. The gauge has jumped 81 percent since hitting a six-year low in March.
More than 25 stocks fell for each that rose in the S&P 500, putting the index on track for the broadest decline in two months, according to data compiled by Bloomberg. Consumer, utility and energy companies erased more than 2.7 percent among S&P 500 groups. Newmont lost 6.7 percent to $29.75 as gold fell below $1,290 an ounce to the lowest price since September 2010.
Producers of household goods had the biggest two-day decline since 2008 as Kraft Foods Group Inc. and Avon Products Inc. tumbled more than 4.2 percent today. The industry fell 3 percent, paring gains for the year to 12 percent.
The S&P Supercomposite Homebuilding Index plunged 7.1 percent, the most in a year. PulteGroup fell the most in the S&P 500, losing 9.1 percent to $18.87. D.R. Horton dropped 9.1 percent, the most since November 2009, to $21.31.
Walt Disney Co. fell 3.7 percent to $61.98 for the largest decline in the Dow, as all members of the 30-stock gauge slid. Intel Corp. dropped 3.3 percent to $24.19.
Exxon Mobil Corp. fell 2.1 percent today, bringing its market capitalization to about $396 billion and leaving no company in the world valued at more than $400 billion for the first time since April, according to data compiled by Bloomberg.
Ebix Inc. sank 44 percent to $11 as Goldman Sachs Group Inc. yesterday terminated an agreement to buy Ebix for $20 a share after federal prosecutors began an investigation of the software company. The U.S. Attorney in Atlanta wrote in a letter that it was probing allegations of intentional misconduct, Ebix said in a statement.
Oracle Corp., fell 9.5 percent to $30.07 as of 5:17 p.m. in New York. After the close of regular trading, the largest maker of database software reported revenue that missed estimates as customers bought Web-based alternatives to the company’s server-installed programs. The Redwood City, California-based company also doubled its quarterly dividend, added $12 billion in buybacks and applied to list on the New York Stock Exchange.
GameStop Corp. added 6.3 percent to $40.94, its highest level since September 2008. Microsoft Corp. removed restrictions on reselling, trading and lending used games for its Xbox One home entertainment unit. Pre-owned games, which GameStop customers trade in for new versions, were 31 percent of the largest video-game specialty retailer’s first-quarter revenue.
Sprint Nextel Corp. added 1 percent to $7.07. The third-largest U.S. wireless carrier raised its bid to acquire the approximately 50 percent of Clearwire Corp. it doesn’t already own. The proposal of $5 a share topped an offer from Dish Network Corp. by 14 percent.
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