US stocks stumble on Greek tensions

US stocks retreated, sending the Standard & Poor’s 500 Index to the lowest level in almost a month, as political tension in Greece intensified concern about a euro exit and a deepening of the region’s debt crisis.

Equities trimmed earlier losses after the S&P 500 dropped below 1,350, a so-called support level being watched by traders. Hewlett-Packard Co. and Bank of America Corp. fell at least 2.1 per cent to pace declines among the biggest companies. McDonald’s Corp., the world’s largest restaurant chain, slumped 2.1 per cent as April sales trailed projections. Fossil Inc. plunged 38 per cent, the most since 1995, after the owner of the namesake watch brand reduced its full-year earnings forecast.

The S&P 500 slid 0.4 per cent to 1,363.72 at 4 p.m. New York time, trimming a loss of as much as 1.6 per cent. The Dow Jones Industrial Average fell 76.44 points, or 0.6 per cent, to 12,932.09 for a fifth day of losses. Greek stocks sank to a two- decade low. About 7.8 billion shares changed hands on US exchanges, or 17 per cent above the three-month average.

‘‘It’s the unknown in Europe affecting the market,’’ said Hank Smith, chief investment officer at Haverford Trust Co. in Radnor, Pennsylvania. His firm manages about $US6.5 billion. ‘‘If Greece does exit the euro, will there be contagion? It could have a negative reverberation throughout the globe.’’

Equities fell as Greece’s leaders met for a second day to try to form a government after an election that raised questions about the nation’s membership of the euro. Alexis Tsipras, leader of the Syriza party who has vowed to rip up the terms of Greece’s bailout, was handed the mandate to form a government after Antonis Samaras of New Democracy failed to reach a deal.

Euro Exit


Concern about the European debt crisis helped drive the S&P 500 down 2.5 per cent in May. The situation in Europe could get ‘‘worse’’ before it gets better, according to James McDonald, chief investment strategist at Northern Trust Corp., whose firm manages $US715 billion. John Taylor of hedge fund FX Concepts LLC said Greece will probably leave the euro as soon as next month as the government runs out of cash and European institutions fail to lend more to the nation.

‘‘This summer I think is very likely,’’ Taylor, founder and chief executive officer of FX Concepts in New York, said today in an interview on Bloomberg Television’s ‘‘Inside Track’’ with Erik Schatzker. ‘‘The Europeans aren’t going to give them the money, the International Monetary Fund’s not going to give them an OK. They will be out of money in June.’’

Stocks pared losses after the S&P 500 dipped below 1,350 for only about 15 minutes this morning. The market found support at that level, according to Michael Shaoul, chairman of Marketfield Asset Management in New York.

’Buy the Dip’

‘‘Once that held, you’ve seen a willingness to buy the dip in the US market in names that people have become comfortable with,’’ said Shaoul. His firm oversees more than $US1.6 billion.

Eight out of 10 groups in the S&P 500 retreated today as consumer discretionary, financial and commodity companies had the biggest declines. Utilities and health-care shares, which are less-tied to economic growth, rose. Hewlett-Packard dropped 2.3 per cent, the most in the Dow, to $US23.32. Bank of America sank 2.1 per cent to $US7.79.

McDonald’s lost 2.1 per cent to $US93.55. Sales at stores open at least 13 months rose 3.3 per cent worldwide last month, trailing estimates, as sales growth slowed in the US Analysts projected a gain of 4.3 per cent, the average of 13 estimates compiled by Consensus Metrix. Sales in the US advanced 3.3 per cent. Analysts estimated an increase of 5.2 per cent.

Electronic Arts dropped 4.3 per cent to $US14.48. The second- largest US video-game publisher tumbled after its forecasts for the current quarter and fiscal year fell short of analysts’ estimates. The company plans to cut jobs.

Most in S&P 500

Fossil plunged 38 per cent, the most in the S&P 500, to $US78.52. Wholesale revenue in Europe in the first quarter rose 4.7 per cent from a year earlier, the Richardson, Texas-based company said today in a statement. Chief Financial Officer Mike Kovar said in a February conference call that wholesale and retail activity in the US and Europe would increase in a ‘‘low double-digit area’’ in the first quarter and for the year.

Discovery Communications Inc. retreated 6.1 per cent to $US50.80. The owner of cable networks such as Animal Planet and TLC reported a 28 per cent decline in first-quarter profit after a one-time gain last year on Oprah Winfrey’s network, OWN.

Wynn Resorts Ltd. slid 4.8 per cent to $US119.23. The casino company founded by billionaire Steve Wynn reported first-quarter earnings fell 19 per cent, missing analysts’ projections on lower winnings in Las Vegas.


Dendreon Corp. slipped 25 per cent to $US8.75. The maker of the prostate cancer drug Provenge said growth this year will be ‘‘modest’’ and its first-quarter loss fell short of estimates.
Investors should buy utilities because the group tends to do better from May through October, when the S&P 500 averages its worst six-month return of the year, according to Sanford C. Bernstein & Co.

A gauge of utilities has risen at an average annualized pace of 12 per cent from May through October since 1970, compared with a gain of 4.5 per cent for the S&P 500, according to data compiled by Bernstein. The group was the second-worst performing among 10 S&P 500 industries, falling 1.7 per cent this year through yesterday, as investors snapped up financial and technology shares in anticipation of an economic rebound.

‘‘With political risk rising in Europe and US economic indicators showing tepid growth, we believe investors should consider holding high yielding, low beta regulated utilities during the traditionally low return, high volatility months of May through October,’’ Hugh Wynne, a New York-based analyst with Bernstein, wrote in a note yesterday.

Facebook IPO

Facebook Inc. officials are touting growth prospects for the largest social network in meetings this week in New York and Boston with hundreds of would-be investors before its record initial public offering. Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman led a presentation in Boston today. They were joined yesterday in New York by Chief Executive Officer Mark Zuckerberg.

Facebook plans to raise as much as $US11.8 billion in its IPO, the biggest ever for an Internet company. Zuckerberg, 27, has had to pitch his business model during Facebook’s years as a private company and probably won’t have trouble communicating the mission to prospective public investors, said Herman Leung, an analyst at Susquehanna International Group.

‘‘It’s important to hear directly from him for investors who are about to put millions and millions of dollars into a company,’’ said Leung, who is based in San Francisco. ‘‘Convincing others now they should buy shouldn’t be that hard for a company that has amassed a user base of over 900 million.’’