Europe re-emerges to bedevil investors

  • Updated: October 8, 2012 - 7:54 PM

Stock slump dropped Apple below $600 billion.

NEW YORK - U.S. stocks retreated, following last week's advance in benchmark indexes, after Apple paced a decline in technology companies and as European finance ministers met to discuss the region's government debt crisis.

Apple, the world's most valuable company, slumped 2.2 percent and dropped below $600 billion in market value. Facebook, operator of the biggest social networking company, slid 2.4 percent after being downgraded at BTIG. Netflix, the world's largest video-subscription service, advanced 10 percent after the shares were raised at Morgan Stanley.

The Standard & Poor's 500 Index slid 0.3 percent to 1,455.88, after climbing 1.4 percent last week. The Dow Jones Industrial Average fell 26.50 points, or 0.2 percent, to 13,583.65. Volume for exchange-listed stocks in the U.S. was 4.1 billion shares, the lowest since July 3.

"We're back to dealing with the issues in Europe," Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said Monday. His firm oversees $20 billion. "We're going back to a period where investors become less enthusiastic as they realize the problems of the world have not gone away."

European finance ministers met in Luxembourg Monday to discuss Spain's overhaul effort and closer banking cooperation, while German Chancellor Angela Merkel visits Greece Tuesday for the first time since the crisis erupted. The World Bank said policymakers in Asia's emerging economies have room to provide more fiscal stimulus as China's slowdown drags the region's growth to an estimated 11-year low in 2012.

Alcoa unofficially starts the earnings season with the release of its third-quarter numbers Tuesday. Third-quarter profits and sales for the S&P 500 probably fell in unison for the first time in three years, according to analysts' estimates compiled by Bloomberg.

Early earnings reports from companies in the S&P 500 are signaling an "ugly" quarter, according to Wells Fargo's Gina Martin Adams. Monsanto, the world's largest seed company, and Nike, the biggest sporting-goods provider, are among the constituents of the U.S. equity benchmark that have reported declining income, according to data compiled by Bloomberg. Analysts project third-quarter earnings will slip 1.7 percent in the first retreat since 2009.

Eight out of 10 groups in the S&P 500 fell as technology companies and telephone providers had the biggest losses.

Apple retreated 2.2 percent to $638.17, dropping 5 percent in three days. The shares have risen 58 percent so far this year, outpacing the 16 percent jump in the S&P 500.

Facebook lost 2.4 percent to $20.40 after being cut to sell from neutral by BTIG. Its 2013 earnings will be "significantly below" analysts' estimates, said Richard Greenfield, an analyst at BTIG.

Netflix rallied 10 percent to $73.52 after Morgan Stanley upgraded the stock, saying competition from Amazon.com's Prime Instant service is "overblown."

Cliffs Natural Resources jumped 5.8 percent to $40.58. The largest U.S. iron-ore producer rose after a jump in prices.

UnitedHealth rose 0.8 percent, the most in the Dow, to $57.60.

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