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London - US stocks declined, with the S&P 500 on pace to hold at a three-week low, amid lingering concerns that tepid global growth will weigh on the American economy.
Bank shares were among those posting the steepest losses for a second day, while travel-related companies led a group of retail stocks lower, with Priceline Group losing 8.4% after its second-quarter profit forecast missed analysts’ projections. Energy producers advanced as crude oil rallied more than 2%.
The benchmark equity index fell 0.7% to 2 049.20 at 15:47, sliding for the fourth time in the last five days. The Dow Jones Industrial Average retreated 124.16 points to 17 626.75. The Nasdaq Composite Index also lost 0.7%.
“We had several economic numbers that came out, and ADP in particular was weaker than expected, which is negative for the market,” said Richard Sichel, chief investment officer at Philadelphia Trust, which oversees $2bn.
“At the moment, data around the world isn’t being taken as positive. We started to test the upper end of the range, and with the absence of more good news to push the needle up, we’re consolidating and moving down.”
A report today showed US companies hired fewer workers in April than estimated, adding to anxiety sparked by yesterday’s weaker factory readings overseas. Separate data showed worker productivity decreased for a second straight quarter and employer costs for labor climbed by the most in more than a year. Adjusted for inflation, hourly earnings increased the most in a year.
Lackluster earnings and lukewarm signs of economic growth have given investors little incentive to keep pushing a rally that sent the S&P 500 up as much as 15% from a February low.
After a tumultuous start to the year amid worries about a global slowdown led by China, a rebound in oil prices and signs of stability in the world’s second-largest economy lifted the gauge to a four-month high on April 20, closing 1.3% away from a record set last May.
“We are back to having the same concerns as the start of the year,” said Veronika Pechlaner, who helps oversee $10bn at Ashburton Investments, part of FirstRand Group, in Jersey, Channel Islands. “We are definitely starting to see consolidation and weakness again. Earnings are still ongoing, with mixed results.”
Along with the report a on private payrolls, data due today include a reading on growth in services industries as well as factory and durable-goods orders. Investors and policy makers are also awaiting the government’s monthly payrolls report on Friday.
After the Federal Reserve left its interest rates unchanged at last month’s meeting, traders are pricing in only a 10% chance of a boost in June. December is now the first month with at least even odds for an increase.
Atlanta Fed chief Dennis Lockhart and San Francisco’s John Williams both pushed back against those market expectations, signaling yesterday that the economy could warrant a rate hike when the policy-setting Federal Open Market Committee gathers on June 14 to June 15.
Investors are also focused on corporate results, and with more than two-thirds of S&P 500 companies having reported earnings this season, the outcome so far has failed to suggest a speedy recovery from what’s shaping up to be a fourth straight quarterly decline.
Apple, Microsoft and Alphabet Inc. all forecast sales in coming periods below analyst estimates, sinking large-cap technology shares even as Facebook and Amazon surpassed forecasts. Meanwhile, banks have used cost cuts to top predictions, helping financial stocks post the second-strongest performance behind energy producers since the reporting period began.
While about 76% of the firms have beaten profit forecasts, and 57% exceeded sales expectations, analysts still project an 8.2% decline in first-quarter earnings, compared with forecasts for flat growth at the start of the year. Earnings reports from Kraft Heinz and MetLife are due later today.
