S&P rally slumps after stocks decline

Sunday, February 28, 2010

U.S. stocks declined last week, trimming the Standard & Poor's 500-stock index's rally for this month as unexpected drops in consumer confidence and equipment orders signaled that the economic recovery might lose momentum.

American Express and Caterpillar fell more than 2 percent after consumer confidence dropped to the lowest level in 10 months and companies scaled back orders for durable goods, excluding transportation equipment. Coca-Cola lost 5.4 percent after the biggest soda-maker agreed to buy Coca-Cola Enterprises's North American bottler. H&R Block retreated 18 percent, and Fluor, which said this year's earnings would miss earlier forecasts, lost 6.8 percent.

The S&P 500 decreased 0.4 percent to 1104.49, posting the first slump in three weeks and paring its advance for the month to 2.9 percent. The Dow Jones industrial average slipped 77.09 points, or 0.7 percent, to 10325.26.

"Investors are coming to grips with the fact that maybe the economic recovery is not going to be as strong as they once thought," said Greg Woodard, portfolio strategist at Manning & Napier, which manages about $27 billion. "It's going to be difficult for the consumer to pick up where monetary and fiscal stimulus left off."

As the U.S. economy recovered from its biggest contraction since the 1930s, the S&P 500 rallied as much as 70 percent from the 12-year low it reached in March. The equity rally stalled a month ago, and the S&P 500 lost as much as 8.1 percent amid concern that the labor market isn't recovering fast enough and that European budget deficits will slow growth.

The U.S. Treasury will auction three-month and six-month bills Monday, then one-month securities Tuesday.

-- Bloomberg News

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