U.S. Stocks Drop From Record as Energy Shares Lead Losses

U.S. stocks slid, pulling benchmark indexes down from records, with energy producers leading declines as oil dropped to the lowest level since 2009.
Exxon Mobil Corp. and Chevron Corp. declined more than 2.2 percent to pace losses in 42 of 43 energy companies in the Standard & Poor’s 500 Index. McDonald’s Corp. lost 3.8 percent, the most in two years, after same-store sales trailed analysts’ estimates. Cubist Pharmaceuticals Inc. (CBST) jumped 35 percent as Merck & Co. agreed to acquire the maker of antibiotics.
The S&P 500 fell 0.7 percent to 2,060.31 at 4 p.m. in New York, its worst loss in almost two months. The Dow Jones Industrial Average slid 106.31 points, or 0.6 percent, to 17,852.48. The Russell 2000 Index of smaller companies dropped 1.3 percent.
“The market has got to take a break, there isn’t a lot of investing cash in the market today and there’s not any one thing in particular that’s forcing it,” Ron Anari, the Jersey City, New Jersey-based senior vice president of trading at ICAP Plc, said via phone. “Lower oil may be better for U.S. consumers but it could be giving us an indication of a slowing global economy, and no matter how good we do here we won’t be fully robust unless the world economy shows some activity.”

Photographer: Richard Drew/AP Photo

Traders on the floor of the New York Stock Exchange.

U.S. stocks began their biggest retreat of the day, a 0.4 percent tumble that began at 12:09 p.m. in New York and lasted 10 minutes, as a handful of large trades in the S&P 500 e-mini contract hit the market. Four transactions in sizes ranging from 300 to 470 contracts occurred between 12:10:41 and 12:13:28 p.m., according to data compiled by Bloomberg.
The Chicago Board Options Exchange Volatility Index, the gauge of options prices known as the VIX, climbed 20 percent to 14.21, the most since October.

Weekly Streak

The S&P 500 retreated today after capping a seventh straight weekly gain, the longest streak in a year, and closing at a record as better-than-estimated payrolls data increased optimism in the economy. The gauge ended the week trading at 18.4 times reported earnings, its highest valuation since 2009. The Dow also reached an all-time high last week, climbing within 10 points of 18,000.
The S&P 500 has rebounded 11 percent from a low in October amid speculation the U.S. economy is strong enough to withstand a slowdown overseas and tighter monetary policy after the Federal Reserve wound up its asset-purchase program.
Chinese overseas shipments rose 4.7 percent from a year earlier in November, the customs administration said today. That missed the 8 percent estimate in a Bloomberg News survey. Imports (CNFRIMPY) fell 6.7 percent, compared with projections of a 3.8 percent increase.
U.S. data last week showed employers added 321,000 jobs in November, the most since January 2012, while the unemployment rate held at a six-year low of 5.8 percent. Reports later this week will show U.S. consumer confidence and retail sales improved, according to economists’ estimates.

Energy Shares

Exxon Mobil retreated 2.3 percent while Chevron lost 3.7 percent to help lead the Dow lower. Schlumberger Ltd., the world’s biggest provider of oilfield services, slid 3.4 percent to $84.21. Denbury Resources Inc., Ensco Plc and Williams Cos. lost at least 6.7 percent.
Energy shares tumbled 3.9 percent as a group to the lowest closing level since April 2013. Laszlo Birinyi, president and founder of money-management and research firm Birinyi Associates Inc., told CNBC “I don’t want to touch the oil stocks.”
Crude slumped 4.2 percent to $63.05 a barrel as OPEC’s refusal to cut output targets amid an oversupply prompted some banks to cut price estimates.

McDonald’s, Wynn

Six of the 10 main groups in the S&P 500 retreated, while utilities, health-care and financial shares had the largest gains.
McDonald’s declined 3.8 percent after the world’s largest restaurant chain posted November same-store sales that trailed analysts’ estimates after efforts to revive growth in the U.S. failed to gain traction. Global sales at stores open at least 13 months fell 2.2 percent.
Wynn Resorts Ltd. slipped 3.9 percent. The government of Macau, where Wynn generates more than two-thirds of its sales, forecast lower gaming revenue in 2015.
Cubist Pharmaceuticals rallied 35 percent, the most in 14 years. Merck agreed to acquire the company for $8.4 billion in cash. Merck will begin a $102-a-share tender offer for Cubist, the companies said in a statement today. Merck added 0.6 percent to $61.88.
Celgene Corp. jumped 3.6 percent to $118.19, the most in the S&P 500, and Gilead Sciences Inc. added 0.9 percent to $105.56.