ECONOMIC INDICATORS

U.S. stocks fall as investors await start of earnings season

BLOOMBERG FILE PHOTO/JIN LEE
STOCKS FELL in the U.S. as investors await the start of the corporate earnings season on Tuesday.
Posted 1/7/13

NEW YORK - U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to a five-year high, as investors awaited the start of the corporate earnings season tomorrow.

Illumina Inc. tumbled 8.5 percent after Roche Holding AG Chairman Franz Humer told a Swiss newspaper that a deal to buy the U.S. genetics company is off the table. Applied Materials Inc., the world’s largest producer of chipmaking equipment, lost 3.2 percent after being downgraded at JPMorgan Chase & Co.

The S&P 500 fell 0.4 percent to 1,460.13 at 9:45 a.m. New York time. The Dow Jones Industrial Average lost 62.90 points, or 0.5 percent, to 13,372.31. Trading in S&P 500 companies was 26 percent above the 30-day average at this time of day.

“We’ve come a long way in a very short time,” said Tom Wirth, who helps manage $1.6 billion as senior investment officer for Chemung Canal Trust Co., in Elmira, New York, said in a phone interview. “I’m expecting better-than-anticipated earnings. Yet we need to see some consolidation first.”

The S&P 500 ended last week at the highest level since 2007 after data showed employers added workers in December at about the same pace as the prior month. The gauge rallied 2.5 percent on Jan. 2 after Republicans and Democrats agreed on a compromise budget that avoided the so-called fiscal cliff of sweeping tax increases and spending cuts.

Earnings season

Alcoa Inc. will unofficially kick off the U.S. earnings reporting season after the market closes tomorrow. Fourth- quarter profits at S&P 500 companies grew an average 2.9 percent, according to data compiled by Bloomberg. Excluding financial companies, earnings increased 0.5 percent.

Illumina Inc. tumbled 8.5 percent to $50.10. The interview “discounts Roche’s intent to purchase Illumina medium-term,” Ross Muken, a New York-based analyst for ISI Group LLC, wrote in a note to investors late yesterday. “We do not believe this precludes Roche from returning to Illumina as a targeted asset in the future and does not diminish its attractiveness as a potential M&A target.”

Applied Materials dropped 3.2 percent to $11.44. The stock was downgraded to underweight from neutral at JPMorgan by equity analyst Christopher Blansett. The 12-month share-price estimate is $10.

Yahoo! Inc. declined 1.6 percent to $19.55. The biggest U.S. Web portal was cut to market perform from outperform at Sanford C. Bernstein & Co.

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