The Standard & Poor’s 500 Index lost 0.2 percent at 11:21 a.m. in New York, threatening to halt a streak of three weekly gains, and the Dow Jones Industrial Average lost 53.62 points to 12,681.01. The S&P GSCI Index of commodities was up 0.7 percent as gasoline and heating oil increased at least 1.2 percent. The euro increased 0.4 percent to $1.3164, while the Italian 10-year note yield sank 15 basis points to 5.90 percent after borrowing costs declined at a bill auction.
The U.S. economy expanded 2.8 percent in the fourth quarter, less than the 3 percent predicted in a Bloomberg survey of economists and underscoring the Federal Reserve’s decision to keep interest rates low for a longer period. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.
“When we sneeze, the world catches a cold,” Lawrence Creatura, who helps oversee $350 billion as a Rochester, New York-based fund manager at Federated Investors Inc., said in a phone interview. “Our health is very important,” he said. “Did the Fed describe their tools very explicitly earlier in the week because it suspected GDP could be soft? The answer is probably yes.”
The Fed said Jan. 25 it plans to keep interest rates low through at least late 2014 and Chairman Ben S. Bernanke said policy makers are considering more bond purchases to boost growth.
The S&P 500 briefly trimmed losses after a gauge of consumer confidence exceeded estimates. The Thomson Reuters/University of Michigan final index of consumer sentiment for January rose to 75.0 from 69.9 at the end of December. The gauge was projected to hold at the preliminary January reading of 74, according to the median estimate in a Bloomberg News survey.
U.S. equities retreated for a second day after the S&P 500 reached the highest level since July and the Dow closed at the highest since May following the Fed’s statement. The S&P 500 is up 4.6 percent in 2012 and has rebounded almost 20 percent from its 2011 low in October amid improving economic data and better- than-forecast earnings.
Earnings have topped estimates at about two-thirds of the 169 companies in the S&P 500 that reported results since Jan. 9, according to data compiled by Bloomberg. The gauge started the session trading at 12.6 times estimated earnings, compared with last year’s low of 11.2 on Aug. 19.
Ford slipped 2.2 percent after reporting fourth-quarter adjusted earnings of 20 cents a share, less the 25-cent estimate in a Bloomberg survey. Starbucks Corp. (SBUX) dropped 2.4 percent after the world’s largest coffee-shop chain narrowed its forecast for profit excluding certain items to a range of $1.78 to $1.82 a share for fiscal 2012, compared with analysts’ average estimate of $1.83.
Juniper Networks Inc. sank 5.2 percent as the second- biggest maker of computer-networking equipment forecast sales and profit that missed estimates.
The Stoxx Europe 600 Index decreased 0.8 percent, wiping out most of yesterday’s rally.
BNP Paribas SA (BNP), France’s biggest bank, retreated 3.1 percent as JPMorgan Chase & Co. downgraded the shares to “neutral” from “buy.” BP Plc (BP/LN) lost 2.6 percent as a U.S. judge ruled that the U.K. oil company can’t collect losses caused by the 2010 Gulf of Mexico spill from Transocean Ltd. Transocean jumped 1.6 percent in U.S. trading.
The Italian two-year note yield declined seven basis points to 3.52 percent. Yields fell to 1.969 percent as Italy sold 8 billion euros of 182-day bills, the lowest level since May and down from 3.251 percent at the previous auction on Dec. 28.
“The auction was quite positive,” said You-Na Park, a foreign-exchange strategist at Commerzbank AG in Frankfurt. “The market is waiting for the summit next week and comments from Germany and France.”
The Spanish 10-year bond climbed for the sixth consecutive day, with the yield 24 basis points lower at 4.97 percent.
The yield on the Greek 10-year bond rose 46 basis points to 33.94 percent. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on a private-sector involvement in Greece this month.