U.S. Stocks Decline After 2-Day Rally as Energy Slumps

By Elena Popina and Callie Bost  

Aug. 12 (Bloomberg) -- Citigroup Chief U.S. Equity Strategist Tobias Levkovich discusses the markets on “Bloomberg Surveillance.” (Source: Bloomberg)

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U.S. stocks fell, after the Standard & Poor’s 500 Index produced its biggest two-day gain since April, as investors watched geopolitical developments and energy shares sank after Brent crude reached a nine-month low.
The S&P 500 fell 0.3 percent to 1,930.24 at 11:04 a.m. in New York. The Dow Jones Industrial Average slipped 43.83 points to 16,526.15 today. Trading in S&P 500 stocks was 27 percent below the 30-day average at this time of day.
“We’re in a zone of ambivalence with investors maintaining a cautious bias,” Terry Sandven, chief equity strategist at Minneapolis-based U.S. Bank Wealth Management, which oversees $124 billion, said by phone. “Equities appear to be navigating the dog days of summer with markets being driven more by geopolitical events than economic and company fundamentals.”
The S&P 500 climbed 1.4 percent in the
past two trading days amid speculation that tension in Ukraine would lessen. The S&P 500 had fallen 3.9 percent from its record of 1,987.98 on July 24 on concern that conflicts from Iraq to Israel and Ukraine could slow global economic growth.
Data today from Germany reignited those concerns, after investor confidence reported by the ZEW Center dropped for an eighth month as the crisis in Ukraine and a sluggish euro-area recovery damped the outlook for Europe’s largest economy.
A Russian humanitarian mission was headed toward eastern Ukraine after the U.S. warned President Vladimir Putin not to use aid as a cover to send in troops.
“We have some bad news on German investor confidence, and bad news from the euro zone in the long term impact the U.S.,” Walter Todd, who oversees more than $1 billion as chief investment officer for Greenwood, South Carolina-based Greenwood Capital Associates LLC, said in a phone interview. “The economic data from the U.S. is very good, but if the economic situation in Europe continues to deteriorate, we’re not going be immune from that forever.”
Recent reports have shown U.S. gross domestic product expanded at a 4 percent annual pace in the second quarter, confirming the Fed’s view that a first-quarter contraction was transitory. Employers in the U.S. added more than 200,000 jobs for a sixth straight month in July, the longest such period since 1997.