U.S. Stocks Fall as Investors Await Jobs Data, Earnings

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U.S. stocks fell, erasing earlier gains, as the Standard & Poor’s 500 Index failed to hold above its average level from the past 50 days and investors awaited a monthly jobs report and the start of corporate earnings.

DaVita HealthCare Partners Inc. tumbled 5.9 percent after the government proposed reducing payments to dialysis-center operators. Constellation Brands Inc. (STZ) slumped 3.6 percent after posting first-quarter earnings that trailed analysts’ estimates. Ford Motor Co. (F) and Abercrombie & Fitch Co. added at least 2.8 percent amid optimism over sales. Zynga Inc. jumped 6.5 percent after naming a new chief executive officer.

The S&P 500 (SPX) slipped 0.1 percent to 1,614.08 in New York, after rising as much as 0.6 percent earlier. The Dow Jones Industrial Average dropped 42.55 points, or 0.3 percent, to 14,932.41. More than 6.1 billion shares traded hands on U.S. exchanges today, or 6.9 percent below the three-month average.

“The market is trying to find some ability to hold in there,” Jason Cooper, who helps oversee $2.5 billion in South Bend, Indiana, at 1st Source Investment Advisors, said in a phone interview. “It’s going to take some actual data to come in to at least reassure investors that the economy is doing OK and people are getting jobs. Corporate America is going to be the important one right now. The Fed has pretty much said what they have to say and not rock the boat any more.”

Stocks climbed earlier as factory orders topped estimates and the Federal Reserve’s William Dudley reiterated that the central bank may prolong bond purchases if needed. The S&P 500 reversed gains after momentarily rising above its 50-day moving average near 1,624. The benchmark gauge also pared gains yesterday after briefly exceeding the technical level.

Goldman Sachs Group Inc. cut its growth forecast for second-quarter U.S. gross domestic product by 1/10 to 1.7 percent after a slower-than-estimated expansion in manufacturing inventories.

Labor Report

Data tomorrow from the ADP Research Institute may indicate American companies increased employment in June. Investors will watch the monthly U.S. labor report later this week for further signs of economic strength. Employers in the U.S. probably created 165,000 jobs in June, almost the same as in the prior month, according to the median forecast of economists in a Bloomberg survey ahead of July 5 figures from the Labor Department. The unemployment rate probably fell to 7.5 percent, matching April’s four-year low.

Alcoa Inc. will unofficially start the second-quarter earnings season after the market close on July 8, as the biggest U.S. aluminum producer becomes the first company in the Dow to report results. Profits (SPX) from S&P 500 companies probably grew 2.4 percent, according to analyst estimates compiled by Bloomberg. That’s down from a projected increase of 6.2 percent at the beginning of the quarter.

Market Resistance

“The recent economic news has been solid but now the market will look to see where earnings come in to drive the next leg up if we continue in this trend,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia at PNC Wealth Management. “We have rebounded nicely after the stumble from the Fed meeting in June so we will start to run into some resistance as we head higher.”

The S&P 500 (SPX) has dropped 3.3 percent since May 21, the day before Fed Chairman Ben S. Bernanke signaled the central bank could scale back asset purchases if the economy improves in line with forecasts. The benchmark gauge rallied 13 percent in the first half of the year, the best performance since a 17 percent gain in the first six months of 1998.

Volatility Gauge

The Chicago Board Options Exchange Volatility Index (VIX), or VIX, added 0.4 percent today to 16.44. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80 percent of the time, reached a six-year low in March and has since surged 45 percent.

Four out of 10 S&P 500 industries fell as industrial and raw-material companies dropped more than 0.3 percent. Energy and telephone stocks climbed at least 0.2 percent.

DaVita HealthCare tumbled 5.9 percent to $114. Dialysis-center operators may see U.S. payments reduced 9.4 percent in 2014 under a Medicare proposal. The government will consider phasing reductions over more than a year, the Health and Human Services Department said yesterday in a regulatory filing. The proposal is subject to public comment and may change before taking effect.

Constellation Brands lost 3.6 percent to $51.25. The wine company reported adjusted first-quarter earnings of 38 cents a share, missing the average analyst estimate of 40 cents.

Mead Johnson

Mead Johnson Nutrition Co. slipped 5.7 percent to $74.90. The world’s largest baby-formula maker said the National Development and Reform Commission, China’s top economic planning agency, carried out a review of documents related to product pricing at Mead Johnson’s China unit recently. The U.S. company said it’s providing “full” cooperation.

China is probing foreign milk-powder companies including Danone and Nestle SA for possibly violating anti-monopoly laws and setting prices too high, the People’s Daily reported.

Achillion Pharmaceuticals Inc. plunged 25 percent to $6.26. The company said U.S. regulators stopped the clinical trial of one of its drugs for hepatitis C after some patients experienced elevated liver enzymes.

Linn Energy (LINE) LLC, the oil and natural gas partnership that agreed to buy Berry Petroleum Co. in February, plunged 19 percent to $27.05, after disclosing a U.S. Securities and Exchange Commission inquiry of the transaction and its accounting.

Auto Sales

Ford (F) rose 2.8 percent to $16.18. The automaker’s sales of cars and light trucks climbed 13 percent to 234,917 last month, beating the 12 percent increase that was the average of 11 estimates.

Retailers advanced. U.S. sales at stores open at least one year rose 2.9 percent from a year earlier during the week ended June 29 as concern over increased inventory and markdowns eased, Johnson Redbook Research said.

Abercrombie & Fitch climbed 3.8 percent to $47.93. The teen retailer may see acceleration in margin expansion amid sales stabilization and cost reductions, Piper Jaffray Cos. wrote in a note, reiterating the stock as a top pick.

Zynga jumped 6.5 percent to $3.27. The maker of social-networking games named Don Mattrick, the former head of Microsoft’s entertainment division, as its new CEO. Mattrick will start July 8, the company said.

Nielsen Holdings NV, the biggest provider of U.S. television ratings, increased 2.1 percent to $33.97. The company will replace Sprint Nextel Corp. in the S&P 500 after the end of trading July 8, S&P said in a statement.

iPhone maker Apple Inc. climbed 2.3 percent to $418.49 for a third straight day of gains. The world’s most valuable technology company is nearing a deal with Time Warner Cable Inc. to give subscribers of the cable television service access to channels via Apple TV, people with knowledge of the negotiations said.

Apple’s shares have retreated 40 percent from a record high in September amid concern that Chief Executive Officer Tim Cook has taken too long to deliver a new breakthrough product to help make up for stiffer iPhone competition.