ECONOMIC INDICATORS

U.S. stocks decline amid concern over European debt crisis

BLOOMBERG FILE PHOTO/TIME BOYLE
U.S. STOCKS FELL amid investor concern over the European debt crisis.
Posted 8/20/12

NEW YORK - U.S. stocks fell, after the Standard & Poor’s 500 Index rose to its highest level since April, amid investor concern European leaders will fail to quell the region’s debt crisis.

All 10 groups in the S&P 500 declined as Germany’s Bundesbank stepped up its criticism of the European Central Bank’s bond-buying program. Yields on Spanish bonds trimmed declines after dropping to a six-week low. Best Buy Co. lost 7.3 percent after saying its founder declined an offer from the board to conduct due diligence and go to shareholders with his buyout offer. Lowe’s Cos. fell 4.2 percent after missing analysts’ profit predictions and cutting its earnings forecast.

The S&P 500 lost 0.4 percent to 1,412.92 at 10:28 a.m. in New York. The U.S. equity benchmark on Aug. 17 came within one point of an almost four-year high struck in April. Dow Jones Industrial Average futures expiring the same month declined 35.76 points, or 0.3 percent, to 13,239.44.

“We’re at a pretty formidable technical resistance here,” Michael Strauss, who helps oversee about $26 billion of assets as the chief investment strategist at Commonfund in Wilton, Connecticut, said in a telephone interview. “The Bundesbank does have a hard problem with this,” he said, referring to the ECB’s bond-buying program. “Germany is being put in the position as being the lender of last resort in Europe.”

The S&P 500 last week capped its longest stretch of weekly gains since January 2011 as economic reports beat forecasts and Germany backed the European Central Bank’s bond-buying plan. Trading volume and volatility have dropped this month as vacationing traders awaited policy clues from the Federal Reserve’s summit at the end of the month and an ECB meeting in September.

The ECB’s governing council may decide at its next gathering to set yield limits on each country’s debt, Spiegel magazine reported yesterday, without saying where it got the information. Government bond purchases “entail significant stability risks,” the Bundesbank said in its monthly report today.

House purchases

Reports in the U.S. this week will show that combined purchases of new and existing houses increased to a 4.89 million annual rate in July from a 4.72 million pace in June, according to the median forecasts in surveys of economists before releases from the National Association of Realtors on Aug. 22 and the Commerce Department the next day. Bookings for long-lasting goods may have climbed the most this year, a release from the Commerce Department will show Aug. 24, according to the median estimate.

The Fed will on Aug. 22 release minutes from the Aug. 1 meeting of the Federal Open Market Committee, when policy makers declined to initiate a third round of monetary stimulus, a policy known as quantitative easing.

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