MARKET breadth weakened and a prominent investor retreated from bullish positions as a vulnerable US stock market slipped off 2-1/2-year highs yesterday.
Energy and basic materials stocks led the slide in the S&P 500’s worst day since 28 January, and billionaire investor Ken Fisher said he is “more neutral on stocks than I’ve been in years”.
Volume remained light with 7.1bn shares changing hands on the combined New York Stock Exchange, NYSE Amex and Nasdaq, below last year’s estimated daily average of 8.47bn.
US retail sales data cast doubts on a rebound in consumer spending, a vital part of the economic recovery, and import prices jumped, while a gauge of manufacturing in New York State climbed to its highest in eight months.
The S&P retail index closed flat after being down earlier in the day.
“More and more companies are worried about the price of input,” said Kim Caughey Forrest, of Fort Pitt Capital Group in Pittsburgh.
“There’s a lot of conflicting data. Low volume means there’s no conviction either way,” she said.
The Dow Jones industrial average lost 41.55 points, or 0.34 per cent, at 12,226.64. The Standard & Poor’s 500 Index fell 4.31 points, or 0.32 per cent, to 1,328.01. The Nasdaq Composite Index slipped 12.83 points, or 0.46 per cent, at 2,804.35.
Shares of JDS Uniphase dropped 10.2 per cent to $25.05 after brokerage Bernstein cut its rating on the stock to “market-perform” from “outperform”. An index of chipmakers’ shares was down 1.1 per cent.
The S&P energy sector carried most of the day’s losses, falling 1.1 per cent. Brent crude oil fell more than 1 per cent on the US retail sales data and as China continued to struggle to keep inflation at bay.
Exxon Mobil was down 2.3 per cent to $82.97, following a 2.5 per cent gain on Monday.
The S&P 500 has nearly doubled from lows hit in March 2009, but waning volume suggests investors are having a harder time finding value.
The spread between daily winners and losers has been narrowing for months, suggesting more of the market’s gains are coming from fewer stocks – generally a sign of a weakening market. Yesterday, declining stocks outnumbered advancing ones on the NYSE and the Nasdaq by a ratio of about 8 to 5.
Shares of NYSE Euronext fell 3.4 per cent at $38.12 after it agreed to be acquired by Deutsche Boerse to create the largest exchange operator.