U.S. Stocks Fall, Led by Oil, Metal Producers; Exxon Drops

By Michael Patterson


Nov. 12 (Bloomberg) -- Energy and metals companies sent stocks lower for a fourth day, the longest stretch of declines in eight months, after commodity prices dropped on concern economic growth is slowing.

Exxon Mobil Corp., the biggest U.S. energy producer, fell to the lowest since August, while Freeport-McMoRan Copper & Gold Inc. posted its steepest decline since February. Apple Inc. lost the most in two years and Google Inc. posted the worst four-day slide in its history, extending the steepest weekly retreat in technology shares since 2002.

The Standard & Poor's 500 Index fell 14.52, or 1 percent, to 1,439.18, led by a 59 percent decline in E*Trade Financial Corp. on concern the online brokerage will go bankrupt. The Dow Jones Industrial Average decreased 55.19, or 0.4 percent, to 12,987.55, its first close below 13,000 since Aug. 16. The Nasdaq Composite Index lost 43.81, or 1.7 percent, to 2,584.13. About five stocks dropped for every three that rose on the New York Stock Exchange.

``Economic growth here in the U.S. is slowing pretty dramatically and that is starting to affect some of these real asset prices,'' said David Chalupnik, a Minneapolis-based senior managing director at First American Funds, which oversees about $68 billion. Concern about the economy ``has been a big headwind for the market.''

Energy Slump

The declines extended a retreat last week led by Cisco Systems Inc., the biggest maker of networking gear, and Citigroup Inc., the largest bank. Stocks gave up gains and fell in today's final 40 minutes as banks and brokerages erased almost all of a 3.2 percent advance and consumer stocks dropped.

The S&P 500 has lost 8.1 percent from its Oct. 9 record and closed at the lowest level since Aug. 28 today.

Exxon dropped $2.31 to $84.54. Freeport-McMoRan, the world's second-largest copper producer, slid $10.36 to $99.25.

Crude oil fell more than $1 a barrel and copper tumbled to the lowest in seven months after imports from China fell in October. China is the second-biggest oil consumer and the largest user of copper.

Gold declined 3.2 percent after the yen strengthened against major currencies, slowing the pace of investment in the precious metal as investors retreated from so-called carry trades.

Market Leaders

Energy and materials shares have led the U.S. stock market's advance this year as commodities prices surged on speculation global economic growth will remain strong. Concern the U.S. housing recession and tighter credit markets will curb demand for fuel and metals has dragged down the S&P 500 Energy Index 9.3 percent from its all-time high last month and pulled down the S&P 500 Materials Index 8.5 percent from a record.

Energy shares dropped 3.8 percent today as a group and raw- material producers retreated 3.7 percent, the two biggest declines among 10 industries in the S&P 500.

E*Trade tumbled $5.04, or 59 percent, to $3.55, its worst drop since its 1996 initial public offering. The company said earnings will fall short of forecast because of a drop in the value of some asset-backed securities. Citi Investment Research's Prashant Bhatia advised selling the shares, saying E*Trade may go bankrupt.

Apple, maker of Macintosh computers and the iPod music player, retreated $11.61, or 7 percent, to $153.76. Google, owner of the world's most-popular search engine, slumped $31.90, or 4.8 percent, to $632.07, bringing its four-day tumble to 15 percent.

Microsoft Downgrade

Microsoft Corp., the world's biggest software maker, fell for a sixth straight day. Merrill Lynch & Co. analysts lowered their recommendation on Microsoft to ``neutral'' from ``buy,'' saying spending on software may slow amid uncertainty about the economic outlook and weak demand from financial companies. The shares lost 35 cents to $33.38.

Some makers of networking software also declined after Oracle Corp., the third-largest software company, said it will offer a free product that lets customers run a variety of programs on a single server computer.

VMware Inc., the largest maker of so-called virtualization software, dropped $7.38 to $80.36. Citrix Systems Inc., a maker of computer-networking software, tumbled $2.32 to $39.47. Oracle gained 8 cents to $19.44.

Blackstone Group LP, manager of the world's biggest leveraged buyout fund, lost $2.02, or 8.3 percent, to $22.26 for its steepest decline since its June initial public offering. Profit excluding some compensation costs dropped to $234 million from $239.1 million a year earlier, the New York-based company said today in a statement. On that basis, profit was 21 cents a share, compared with the 30-cent average estimate of seven analysts surveyed by Bloomberg.

Rally Reversed

Stocks traded higher for most of the day as investors snapped up shares of banks, brokerages and department stores that had fallen to their cheapest valuations in at least 12 years.

The S&P 500 Diversified Financials Index climbed as much as 3.2 percent today before paring its advance to close up 0.1 percent. The gauge last week traded at the lowest relative to its 30 members' net assets since Bloomberg began tracking the data in 1995.

Citigroup Inc., the biggest U.S. bank by assets, gained 47 cents to $33.57 after earlier rising as high as $35.06. The shares traded at 1.3 times book value last week, the lowest since at least 1998, according to Bloomberg data. Bank of America Corp., the second-largest U.S. bank, ended the day unchanged at $43.98 after rising as much as 3.2 percent.

Retailers Rise

Wal-Mart Stores Inc. rallied 42 cents, or 1 percent, to $43.32 after Goldman, Sachs & Co. said the world's biggest retailer may take business from rivals as a slower economy drives customers to its lower-priced goods. Wal-Mart is scheduled to report third-quarter earnings tomorrow.

The S&P 500 Retailing Index advanced for the first time in four days, climbing 1 percent. The gauge last week traded for 14.7 times earnings, a level not seen since Bloomberg began tracking the weekly data in February 1995.

Family Dollar Stores Inc., a retailer known for selling items priced $1 or less, jumped 98 cents, or 4.4 percent, to $23.51. Macy's Inc. climbed 26 cents to $28.75, snapping a nine- day retreat that had dragged the shares down 15 percent.

Johnson & Johnson, Abbott Laboratories and Medtronic Inc. climbed after the New York Times reported drug-coated heart stents may be safer than alternatives for some patients, citing doctors.

Johnson & Johnson gained $1.15 to $66.31. Abbott added 55 cents to $54.67. Medtronic increased 32 cents to $46.36. The gains helped boost a gauge of health-care stocks in the S&P 500 by 0.4 percent.

IBM Acquisition

International Business Machines Corp. increased $1.20 to $101.45. The world's second-biggest software maker agreed to buy Cognos Inc. for $4.9 billion, its largest acquisition. Cognos' so-called business intelligence programs help companies monitor data on budgets and inventory and analyze whether they are meeting targets.

The dollar rose the most against the euro since July 2006 as credit-market losses pushed investors to reduce holdings of assets in higher-yielding currencies. Bond markets were closed today because of the Veterans Day holiday.

The Russell 2000 Index, a benchmark for companies with a median market value of $616 million, dropped 0.7 percent to 767.09. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, fell 1.1 percent to 14,542.69. Based on its decline, the value of stocks decreased by $208.3 billion.

The four-day slide in the S&P 500 and Dow Jones Wilshire 5000 are the longest losing streaks for both indexes since Feb. 27.

Abbott Laboratories (ABT US)
Apple Inc. (AAPL US)
Bank of America Corp. (BAC US)
Blackstone Group LP (BX US)
Citigroup Inc. (C US)
Citrix Systems Inc. (CTXS US)
E*Trade Financial Corp. (ETFC US)
Exxon Mobil Corp. (XOM US)
Family Dollar Stores Inc. (FDO US)
Freeport-McMoRan Copper & Gold Inc. (FCX US)
Google Inc. (GOOG US)
International Business Machines Corp. (IBM US)
Johnson & Johnson (JNJ US)
Macy's Inc. (M US)
Medtronic Inc. (MDT US)
Microsoft Corp. (MSFT US)
Oracle Corp. (ORCL US)
VMware Inc. (VMW US)
Wal-Mart Stores Inc. (WMT US)