U.S. stocks fell, following yesterday’s rally in the Standard & Poor’s 500 Index, as American retail sales growth trailed economists’ estimates and investors watched Greece’s attempts to tame its debt crisis.
Bank of America Corp. declined 3.3 percent after Citigroup Inc. cut its recommendation on the lender’s shares. Goodyear Tire & Rubber Co. (GT) retreated 8.6 percent as revenue at the largest U.S. tiremaker missed analysts’ forecasts. Masco Corp. (MAS) dropped 13 percent after the home improvement and building products maker reported a quarterly loss.
The S&P 500 slid 0.5 percent to 1,345.54 at 11 a.m. New York time. Yesterday’s gain put the benchmark gauge less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The Dow Jones Industrial Average fell 35.27 points, or 0.3 percent, to 12,838.77.
“The thing with a lot of the economic data is that it’s just very choppy,” Paul Simon, chief investment officer at Tactical Allocation Group LLC in Birmingham, Michigan, said in a telephone interview. His firm oversees $1.6 billion in assets. “It’s a reflection of the systemic struggles that the economy has going in fits and starts. You’ve had a pretty significant run-up in the market and you haven’t really had any significant pullback. We approached the highs of 2011 and that’s going to be a resistance in the very, very short term.”
the 0.4 percent gain in January retail sales followed little change in December that was initially reported as a 0.1 percent increase. Last month’s advance was half the 0.8 rise median forecast of economists surveyed by Bloomberg News, reflecting an unexpected drop at auto dealers. Excluding cars, demand climbed 0.7 percent, more than projected.
Investors also watched Europe’s attempts in taming its crisis. German Finance Minister Wolfgang Schaeuble said Europe is better prepared for a Greek default than two years ago. German investor confidence surged to a 10-month high in February as global growth improved and Europe’s debt crisis showed signs of abating. Italian and Spanish borrowing costs plunged to the lowest in at least 11 months at debt sales today as investors ignored downgrades by Moody’s Investors Service.
Financial (S5FINL) shares dropped the most among 10 industries in the S&P 500, slipping 1.6 percent. Bank of America lost 3.3 percent to $7.98 as Citigroup cut its rating to “neutral” from “buy.”
Goodyear fell 8.6 percent to $12.77. The tiremaker reported fourth-quarter revenue of $5.68 billion, missing the average analyst estimate of $5.88 billion.
Masco dropped 13 percent to $11.49. The company reported a fourth-quarter loss from continuing operations of 9 cents a share, wider than the average analyst estimate of a loss of 2 cents.
Gap Inc. (GPS) rallied 2.6 percent to $22.28. Citigroup raised its recommendation for the largest U.S. specialty apparel chain to “buy” from “neutral” and also lifted its share-price estimate to $26 from $24.
Dividend-paying stocks are still a “winning theme” for investors even though they have gotten off to a relatively slow start this year, according to Gina Martin Adams, a strategist at Wells Fargo Securities LLC.
While the Standard & Poor’s 500 Dividend Aristocrats Index rose 4.2 percent for the year through yesterday, the gain was 2.6 percentage points smaller than the S&P 500’s advance. By contrast, the indicator fared better than the S&P 500 in the past two years, its first back-to-back wins since 2002. The index is comprised of companies that have raised payouts for at least 25 consecutive years, relative to the S&P 500.
Payout ratios suggest companies can distribute plenty more money to shareholders, Martin Adams wrote yesterday in a report. She noted that dividends equal 27 percent of S&P 500 earnings, the lowest figure in more than a century, according to data compiled by Yale University Professor Robert Shiller.
“Companies may be only just beginning to catch on to the fact that investors are keenly interested in dividend-paying stocks,” the report said.