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Most U.S. stocks retreat on bond auction

Most U.S. stocks retreat on bond auction

Most U.S. stocks fell for a third day as stronger-than-forecast demand in a Treasury auction and an unexpected drop in consumer confidence spurred concern investors are questioning the strength of the economic recovery.
Alcoa Inc., Walt Disney Co. and Hewlett-Packard Co. lost at least 1.1 percent after the Conference Board's gauge of sentiment trailed estimates and its measure of employment availability slumped to a 26-year low. International Business Machines Corp. helped lead the market higher earlier after its board approved US$5 billion in buyback funds. Treasuries rose following the record US$44 billion auction of two-year notes.
More than two stocks retreated for each that gained on the New York Stock Exchange. The Standard & Poor's 500 Index slipped 0.3 percent to 1,063.41 at 4:03 p.m. yesterday in New York. The Dow Jones Industrial Average increased 14.21 points, or 0.1 percent, to 9,882.17 as IBM gained and Exxon Mobil Corp. and Chevron Corp. climbed on a rebound in oil. The Nasdaq Composite slid 1.2 percent as Baidu Inc. and Wynn Resorts Ltd. tumbled 11 percent.
"The Treasury auction took some wind off the stock market," said Peter Boockvar, an equity strategist at Miller Tabak & Co. in New York. "It reflects some rising risk aversion and belief the Fed will remain on hold because the economy is still looking very iffy. People are concerned about the sustainability of the economic improvement. The market might be heading for a correction phase."
Consumer-discretionary shares posted the steepest decline in the S&P 500 among 10 groups after the Conference Board's consumer confidence index unexpectedly fell to 47.7. The S&P 500 has jumped 57 percent from a 12-year low in March amid speculation an economic recovery will restore profit growth.
"For this recovery to have sustainability, we need to see a healthy consumer," said Keith Wirtz, chief investment officer at Fifth Third Asset Management Inc., which oversees US$18.6 billion in Cincinnati. "Any statistic that is consumer-centric will weigh on the market." Johnson Controls Inc. led a gauge of carmakers and components companies down 2.9 percent for the biggest decline among 24 industries.
The world's largest maker of auto seats reported a 16 percent drop in quarterly revenue in its structural controls unit as construction slowed and owners deferred repairs. The company said 2010 earnings will be US$1.35 to US$1.45 a share. Analysts surveyed by Bloomberg estimate profit of US$1.51 a share on average. Johnson Controls fell 4.8 percent to US$25.03.
Limited Brands Inc. led consumer discretionary stocks down 1.7 percent. The owner of the Victoria's Secret chain said it expects percentage declines in sales at store open at least one year will be "in the negative low-to-mid single digits" this month. The company had expected sales to be "roughly flat." Limited Brands slumped 8.1 percent to US$17.91.


Updated : 2021-05-10 08:04 GMT+08:00