U.S. stocks fell, snapping a five- week-rally for the Standard & Poor’s 500 Index, amid concern plans to help Greece avoid default were unraveling and as confidence among American consumers dropped more than forecast.
The S&P 500 declined 0.7 percent to 1,342.52 as of 4 p.m. New York time, according to preliminary closing data, the most since Dec. 28. The benchmark gauge for American equities has fallen 0.2 percent since Feb. 3, snapping the longest weekly rally since January 2011.
“We’ve had a flip-flop that triggered global selling,” Frederic Dickson, who helps oversee $28 billion as chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon, said in a telephone interview. “Investors are responding to the sudden change in direction or the lack of resolution of the Greek/European problem that they felt was resolved.”
Global equities tumbled after George Karatzaferis, who heads one of the three parties supporting interim Prime Minister Lucas Papademos, said he wouldn’t support austerity measures worked out for a rescue. He spoke hours after German Finance Minister Wolfgang Schaeuble told lawmakers in Berlin that Greece was missing deficit targets. S&P downgraded 34 Italian Banks after reducing the nation’s grade last month.
Stocks extended losses as the Thomson Reuters/University of Michigan preliminary index of consumer sentiment dropped to 72.5 from 75 in January. The median estimate in a Bloomberg News survey called for 74.8. The gauge averaged 89 in the five years leading to the 18-month recession that ended in June 2009.
Today’s slump followed a three-day rally that yesterday put the S&P 500 less than 1 percent away from its peak nine months ago of 1,363.61, which was the highest level since June 2008. The benchmark gauge climbed 7.5 percent this year through yesterday, as companies reported earnings that beat analysts’ estimates while better-than-expected data on manufacturing and employment bolstered optimism about the world’s largest economy.
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