U.S. stocks retreat for first time in five days

Staff Writer
Columbus CEO

(c) 2013, Bloomberg News.

NEW YORK — U.S. stocks fell Friday, with the Standard & Poor's 500 index trimming a weekly gain, after benchmark indexes rallied to all-time highs Thursday amid optimism over the economic recovery.

Twitter slid 13 percent after Macquarie Group downgraded the stock. Delta Air Lines retreated 3.1 percent after the airline said Thursday it will honor tickets sold at incorrect prices on its website. Textron rose 1.1 percent after the manufacturer of Cessna aircraft said it will buy Beechcraft for $1.4 billion. FirstEnergy added 2.3 percent after the utility company was upgraded at Wells Fargo & Co. to outperform from market perform.

The S&P 500 fell less than 0.1 percent to 1,841.40. The Dow Jones industrial average slipped 1.47 points, or less than 0.1 percent, to 16,478.41. Both measures posted their second weekly gain. Volume has been lower-than-average amid the Christmas holiday this week. About 4 billion shares changed hands on U.S. exchanges Friday, 34 percent below the three-month average, according to data compiled by Bloomberg.

"A year-end rally like this is not usual, but we have to keep in mind trading volumes are light and corporate news is certainly sparse this week," Robert Landry, the San Antonio- based executive director and money manager at USAA Investments, said by telephone. His firm oversees about $59 billion. "You can't read too much into the market's move. It's somewhat of a Santa Claus rally and perhaps that's attributed to some portfolios managers in the office making some year-end moves."

The S&P 500's retreat Friday halted a four-day rally that was fueled by improving economic data. A Labor Department report Thursday showed that jobless claims declined by more than forecast, boosting optimism in the world's largest economy. There were no economic reports scheduled for Friday.

The benchmark equity index has advanced 29 percent in 2013, putting it on course for its biggest annual rally since 1997. The S&P 500 has gained 2 percent so far this month. December has been the second-best month for U.S. equity returns, according to data compiled by Bloomberg that starts in 1928. The average gain for the month is 1.5 percent, more than twice the overall monthly mean of 0.6 percent. The last December retreat for the S&P 500 was in 2007.

The Federal Reserve, which has made employment creation a determinant factor of its monetary stimulus, said on Dec. 18 that it will reduce the pace of bond buying amid faster-than- estimated economic growth. Three rounds of stimulus, known as quantitative easing, have sent the S&P 500 as much as up 172 percent from a 12-year low in 2009.

"I don't see why stocks can't have a reasonable year in 2014, given that the global economy does seem to very slowly improve and Fed has started a tapering program," Landry said. "There are some things in place to suggest it could be a decent year for stocks but not on the magnitude we've seen this year."

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, rose 1.1 percent to 12.46, halting a four-day retreat. The gauge has dropped 31 percent this year, the largest annual decline since 2009.

Six of 10 main S&P 500 groups fell Friday, with producers of consumer discretionary products falling 0.4 percent to lead losses.

Twitter dropped 13 percent, the most since it began trading in November, to $63.75. The microblogging service was cut to underperform from neutral at Macquarie Group, which cited the stock's 40 percent surge from Dec. 11 through Thursday.

Delta retreated 3.1 percent to $27.03. The airline said Thursday it will honor tickets sold at incorrect prices on its website and through other booking channels after customers snapped up bargains like a round trip to Hawaii for $6.90.

Energy producers added 0.5 percent for the biggest advance out of 10 groups in the S&P 500, as the price of crude topped $100. Nabors Industries rallied 2.8 percent to $16.84 for the biggest gain since Nov. 8. Newfield Exploration added 2 percent to $24.54, while Peabody Energy jumped 3.3 percent to $19.25.

Textron rose 1.1 percent to $36.61. The company, seeking to counter a slump in business-jet sales, agreed to buy Beechcraft to boost its lineup of propeller-driven aircraft.

Providence, Rhode Island-based Textron will purchase all outstanding equity interests in Beech Holdings, the parent of Beechcraft, it said in a statement Thursday. The deal, which includes the repayment of Beechcraft's working capital debt, will be financed by a combination of available cash and as much as $1.1 billion in new debt.

FirstEnergy added 2.3 percent to $32.79. The Akron, Ohio-based company was upgraded by Wells Fargo analyst Neil Kalton, who said a potential dividend cut of 40 percent is "integral" to a positive view on the shares.