U.S. Stock Futures Fall as Europe Outweighs Economic Optimism

ConocoPhillips and Bank of America Corp. retreated at least 0.7 percent, pacing losses among the biggest companies.

S&P 500 futures expiring in March declined 0.2 percent to 1,257.70 at 7:36 a.m. New York time. The benchmark gauge for U.S. equities climbed 5 percent over the previous four days. Dow Jones Industrial Average futures lost 21 points, or 0.2 percent, to 12,196 today. The U.S. stock market was closed yesterday.

The S&P 500 erased its loss for 2011 last week as data on consumer confidence and housing starts added to expectations the U.S. can weather Europe’s debt woes. The index had fallen as much as 19 percent from this year’s high in April on concern Europe was struggling to tame its crisis. The gauge was up 0.6 percent in 2011 through Dec. 23 as utility shares and consumer companies that sell necessities led the gains.

Italian government bonds fell, pushing the yield on benchmark 10-year securities to more than 7 percent, as the nation prepares to auction as much as 20 billion euros ($26.2 billion) of debt in the next two days. Home prices in 20 U.S. cities probably fell at a slower pace and consumer confidence climbed, signs of resilience in the economy heading into 2012, economists said before reports today.

Some of the biggest American companies fell today. ConocoPhillips, an oil company, slumped 2.3 percent to $70.76. Bank of America declined 0.7 percent to $5.56.

Stock Swings

Stock swings that reached twice the five-decade average left the S&P 500 with the smallest price change in 41 years and utilities, soapmakers and health-care providers at the highest valuations since 2008.

The S&P 500 rose 3.7 percent last week, sending the measure to a gain of 0.6 percent for the year. The last time it moved less on an annual basis was in 1970, when it fell 0.1 percent. Within the gauge, companies least tied to economic growth, such as Biogen Idec Inc. and Hershey Co., increased an average 15.7 percent including dividends, returning 8.2 times more than the index after adjusting for historical price swings. That’s the biggest gap since at least 1989.

Bears say that the 2011 performance means there are even fewer stocks worth buying after valuations for defensive shares increased 7.4 percent. With the U.S. showing more signs of growth, bulls say the divergence between those shares and companies most dependent on the economy preceded market-wide rallies in 2001, 2007 and 2009.

“The combination of a very crowded trade and a market that’s very cheap with a lot of doubters suggests to me the place to put funds is in the market overall,” Andrew Slimmon, the Chicago-based managing director of global investment solutions at Morgan Stanley Smith Barney LLC, which has $1.7 trillion in client assets, said in a phone interview Dec. 19.




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