Stocks Reverse Gains as Technology Slumps

Stocks Reverse Gains as Technology Slumps; Treasuries Advance

By Rita Nazareth and Kelly Bit

July 29 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for a third day, as forecasts that disappointed investors at technology companies wiped out an early rally. Ten-year Treasuries reversed losses.

The S&P 500 slipped 0.9 percent to 1,096.54 at 12:37 p.m. in New York, trimming its July advance to 6.5 percent. The Stoxx Europe 600 Index fell 0.4 percent, wiping out earlier gains that sent the gauge above its highest close in 12 weeks. The euro pared its advance, rising 0.6 percent to $1.3066 after topping $1.31 for the first time since May. Ten-year Treasury yields lost 1 basis point to 2.98 percent, down from a session high of 3.03 percent.

Technology shares were the biggest drag on the S&P 500 after Akamai Technologies Inc. said its profit margin shrank, while Nvidia Corp. and Symantec Corp. tumbled on profit forecasts. Financial shares reversed gains after New York Attorney General Andrew Cuomo began a fraud probe into the life insurance industry and subpoenaed MetLife Inc. and Prudential Financial Inc.

“There’s enough nervousness out there -- sentiment is extraordinarily tentative,” said Robert Weissenstein, who oversees $130 billion as chief investment officer at Credit Suisse Group AG’s private banking unit in New York. “Even in the face of good news there’s a hesitation to embrace that.”

Early Gains Reversed

Earlier gains in equities followed better-than-estimated earnings at companies from Exxon Mobil Corp. to AstraZeneca Plc, a decrease in U.S. jobless claims and improving confidence in Europe’s economy. About 70 percent of companies in the MSCI World Index have reported better-than-projected profit so far in the second-quarter reporting season, according to data compiled by Bloomberg.

The S&P 500 has slumped 1.9 percent over the past three days as a slump in consumer confidence and a drop in durable goods orders spurred concern the economic rebound is slowing as the government unwinds stimulus programs. A Commerce Department report tomorrow may show U.S. growth slowed to 2.6 percent in the second quarter, from 2.7 percent in the first, based on the median forecast of economists in a Bloomberg survey.

Jan Hatzius, chief U.S. economist for Goldman Sachs Group Inc., said in a note to clients that the unwinding of federal and state stimulus spending is likely to reduce gross domestic product by 1.7 percentage points in 2011 after boosting growth by 1.3 percentage points between early 2009 and early 2010.