(Bloomberg) — U.S. stocks fell, after equity gauges dropped from records, as investors weighed valuations before the start of the earnings season.
Delta Air Lines Inc. and Southwest Airlines Co. slid at least 4.5 percent as carriers slumped. AbbVie Inc. dropped 1.6 percent after raising its offer to buy Shire Plc to $51.5 billion. Alcoa Inc. was little changed before it reports results later today. Groupon Inc. advanced 2.4 percent as B. Riley & Co. recommended buying the stock.
The Standard & Poor's 500 Index slipped 0.4 percent to 1,969.08 at 9:46 a.m. in New York. The Dow Jones Industrial Average lost 79.99 points, or 0.5 percent, to 16,944.22. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.
"With the equity markets hitting new highs, you might be seeing people take some of those gains off the table," Chris Gaffney, senior market strategist at EverBank Wealth Management in St. Louis, said in a phone interview. "We're setting up in wait-and-see mode ahead of earnings. The equity markets going forward are going to be all about the consumer and whether they're able to support higher earnings."
Both the S&P 500 and the Dow retreated from records yesterday amid speculation the Federal Reserve will raise interest rates sooner than expected. The Russell 2000 Index of smaller companies tumbled 1.8 percent, the most since April 25.
The Fed will release minutes from its June meeting tomorrow. Policy makers trimmed bond purchases last month by $10 billion for the fifth consecutive time, saying economic growth is rebounding and the job market is improving.
Rate Timing
Officials are debating the timing for the first increase in the main interest rate since 2006. Policy makers have kept their target for overnight lending between banks in a range of zero to 0.25 percent since December 2008.
Goldman Sachs Group Inc. yesterday joined banks including JPMorgan Chase & Co. and Bank of Tokyo-Mitsubishi UFJ Ltd. in bringing forward it estimates for Fed rate increases after data last week showed the economy added more workers than estimated in June.
In Europe, signs the economic recovery is losing momentum sent stocks lower for a third day. U.K. manufacturing unexpectedly slumped the most in 16 months in May and German exports contracted more than estimated, data showed today.
Alcoa, the largest American aluminum producer, will report second-quarter earnings after the close of trading today, unofficially kicking off the season. Citigroup Inc., JPMorgan Chase & Co., Goldman Sachs, Yahoo! Inc. and Johnson & Johnson are among companies reporting financial results in the next week.
