U.S. Stocks Retreat on Concern Public Debt Will Stifle Recovery
By Rita Nazareth
March 22 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as an International Monetary Fund official said economies face “acute” challenges in tackling public debt.
Exxon Mobil Corp., the largest U.S. oil company, and ConocoPhillips, the third-biggest, paced declines in all 40 energy companies in the S&P 500 as crude oil dropped to near $79 a barrel. Freeport-McMoRan Copper & Gold Inc. and Alcoa Inc. fell more than 1 percent as metal prices retreated. Pfizer Inc. and WellPoint Inc. helped lead health-care companies to the biggest gain among 10 groups in the S&P 500 after an overhaul of the industry was approved by the U.S. House.
The S&P 500 decreased 0.1 percent to 1,158.61 at 9:53 a.m. in New York. The Dow Jones Industrial Average lost 3.77 points, or less than 0.1 percent, to 10,738.21. The Nasdaq Composite Index increased 0.1 percent to 2,376.57 as Oracle Corp. and Apple Inc. advanced.
U.S. stocks declined on March 19, ending an eight-day winning streak for the Dow Jones Industrial Average, as India’s unexpected interest rate boost spurred speculation that withdrawals of economic stimulus will curtail global growth.
“The market needs a breather,” said Mark Bronzo, an Irvington, New York-based money manager at Security Global Investors, which oversees $21 billion. “It’s had a nice run. There’s concern about the global stimulus being pulled away. In addition, any commentary about developed economies’ debt, especially in Europe, will have an impact on the market.”
‘Acute’ Challenges
Advanced economies face “acute” challenges in tackling high public debt, and unwinding existing stimulus measures won’t come close to bringing deficits back to prudent levels, John Lipsky, first deputy managing director of the International Monetary Fund, said in a speech yesterday at the China Development Forum in Beijing.
The Reserve Bank of India raised its benchmark rates after local financial markets closed on March 19, a month earlier than the next scheduled review, to tame the fastest inflation in more than a year.
Policy makers in Australia and Malaysia have also increased rates since the end of February, while China has ordered lenders to set aside more funds as reserves twice this year.
“There’s a lot of structural headwinds around at the moment,” said Markus Steinbeis, head of equity portfolio management at the German unit of Pioneer Investments, which oversees about $221 billion globally. “Sentiment is neutral to negative and we could see a couple of days of consolidation before trading higher.”
Exxon lost 0.6 percent to $66.64. ConocoPhillips dropped 1.6 percent to $51.54 as crude fell in New York amid concern governments around the world may follow India in raising interest rates, damping the recovery in global fuel demand.
Freeport, the world’s largest publicly traded copper producer, lost 1.6 percent to $77.26 in New York, while Alcoa dropped 1.9 percent to $13.99. Copper, lead, nickel, tin and zinc fell on the London Metal Exchange.
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