US stocks fell, as the Standard & Poor’s 500 Index pared its third straight annual gain, as concern over Spain’s budget deficit overshadowed optimism that the American economy will expand in 2012.
Bank of America Corp. (BAC), which had the biggest decline in the Dow Jones Industrial Average for the year, sank 0.4 per cent as financial companies slumped. Sears Holdings Corp (SHLD) retreated 0.9 per cent after Fitch Ratings downgraded its long-term default ratings. Freeport-McMoRan Copper & Gold Inc. (FCX) and Hecla Mining Co. (HL) rose 0.9 per cent as commodity producers posted the biggest gains out of 10 groups in the S&P 500.
The S&P 500 fell 0.1 per cent to 1,261.80 at 10:32 a.m. New York time. The benchmark gauge for American equities is heading for a 0.3 per cent gain this year. The Dow Jones Industrial Average slipped 22.86 points, or 0.2 per cent, to 12,264.18.
“The US economic data has been experiencing some bounce in the last quarter,” Kevin Shacknofsky, who helps manage about $5 billion for Alpine Mutual Funds in New York, said in a telephone interview. “The negative is still Europe. Spain numbers show that it’s very difficult to have strong economic performance while you’re trying to deleverage.”
Equity futures erased earlier gains after Spain said its budget deficit will reach 8 per cent of gross domestic product this year, more than the previous forecast of 6 per cent. Luxembourg’s Jean-Claude Juncker, who leads the group of euro- area finance ministers, said economic growth in the euro region “isn’t good” and the world economy is growing only in some Asian and African countries.
China’s official Xinhua News Agency reported the world’s second-largest economy may face “downside pressure” next year, even though growth will be more than 9 per cent in 2011. The S&P 500 rose 1.1 per cent yesterday as data signaled the world’s largest economy is weathering the euro-area debt crisis. The measure has rallied 12 per cent in the fourth quarter. Both the S&P 500 and the Dow Jones Industrial Average are among the 10 best performers this year among 91 national indexes tracked by Bloomberg.
“The story of this year is really interesting outperformance of the US equity market versus everything else,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees $1 billion, said in a telephone interview. “If you strip financials and materials out of the US, you had a pretty good year.”
Financial shares have fallen the most (SPXL1) among the 10 main industries in the S&P 500 (SPX) this year, losing 18 per cent as a group through yesterday, followed by losses of 12 per cent in raw-material producers. Utilities, consumer-staples providers and health-care companies, among stocks considered the least sensitive to economic prospects, rose at least 10 per cent for the top gains.
The S&P 500 started the year with a rally, rising as much as 8.4 per cent to a three-year high by the end of April and extending its rebound from a March 2009 bear-market low to 102 per cent. The index tumbled throughout the summer as Congress and President Barack Obama struggled over US deficit cuts, and sank further amid concern that the euro-area’s debt crisis was threatening the global economic recovery. The S&P 500 fell as much as 19 per cent from April to its low for the year on Oct. 3. Data signaling that the world’s largest economy was weathering Europe’s crisis helped the market rebound during the fourth quarter. The US unemployment rate fell to 8.6 per cent in November, the lowest since March 2009, after lingering at 9 per cent or above for seven straight months.
Bank of America
Bank of America slid 0.4 per cent to $5.44. The bank is on track to be this year’s worst performer in the Dow as concern about mounting mortgage losses and a global economic slowdown weighed on the second-biggest US lender. The 59 per cent decline through yesterday erased almost $80 billion of shareholder value at Charlotte, North Carolina-based Bank of America. JPMorgan Chase & Co erased 0.8 per cent to $33.17. Regions Financial Corp. (RF) dropped 1.2 per cent to $4.31, leading losses among financial stocks, which declined 0.4 per cent as a group.
Sears retreated 0.9 per cent to $32.61. Fitch downgraded the long-term default ratings of the retailer to CCC from B, after the company said this week it will close as many as 120 Kmart and Sears full-line stores.
Freeport-McMoRan climbed 1.4 per cent to $37.06, pacing gains among raw material producers, which rose 0.2 per cent as a group. Hecla advanced 0.9 per cent to $5.28, as prices of precious metals rose. Gold added 2 per cent to $1,571.40 an ounce, extending an 11th annual gain. BLOOMBERG