Stocks fall after S&P 500 nears record on economic reports

NEW YORK – U.S. stocks fell, erasing early gains after the Standard & Poor’s 500 Index came within four points of a record as data showed an increase in retail sales and a drop in jobless claims.

Dollar General Corp. slipped 2.6 percent as it forecast first-quarter earnings below analyst estimates. Amazon.com Inc. climbed 2.6 percent as the world’s largest Internet retailer boosted the price of its Prime membership. Williams-Sonoma Inc. jumped 10 percent after the seller of cookware and home furnishings predicted sales this year will increase more than analysts project.

The S&P 500 fell 0.2 percent to 1,865.19 at 11:23 a.m. in New York. The equity benchmark index erased gains after approaching its closing record of 1,878.04 reached on March 7. The Dow Jones Industrial Average dropped 41.20 points, or 0.3 percent, to 16,298.88. Trading in S&P 500 stocks was 19 percent below the 30-day average at this time of day.

“The markets are in the mode where we’re hitting record highs domestically and there are very few things to make the market move higher,” Randy Frederick, managing director of trading and derivatives at Charles Schwab Corp. which manages $2.2 trillion in client assets, said by phone. “A few points is nothing to be alarmed about and this week has been a consolidation week as it is.”

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Americans ventured out to shop last month even as colder-than-normal temperatures and severe snowstorms blanketed parts of the U.S., showing the economic expansion is regaining momentum. The 0.3 percent advance in retail sales followed a 0.6 percent drop in January that was larger than initially reported, Commerce Department figures showed.

Jobs data

A separate report showed the number of Americans filing applications for unemployment benefits fell last week to the lowest level since the end of November, a sign of further improvement in the labor market. Jobless claims dropped by 9,000 to 315,000 in the week ended March 8, Labor Department data showed. The median forecast of 53 economists surveyed by Bloomberg called for a rise to 330,000.

The government’s monthly jobs report last week showed U.S. employers added more workers than estimated in February. The Federal Reserve is trying to determine how much recent economic data has been affected by weather.

“The lingering question has been how disruptive this deep freeze has been to the economy,” James Dunigan, who helps oversee $127 billion as chief investment officer in Philadelphia at PNC Wealth Management, said by phone. “As we come out of this deep thaw, if we get some better, more clear data on the underlying trend, we’re going to see that the economy is continuing to gain momentum. Investors’ interest at this levels shows the market seems to be the only game in town. We are only seeing brief pullbacks here.”

Fed stimulus

The S&P 500 has gained 0.9 percent this year after Fed Chair Janet Yellen said the U.S. economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases. Three rounds of Fed stimulus have helped push the S&P 500 up 176 percent from a 12-year low, as U.S. equities begin the sixth year of a bull market that started March 9, 2009.

The Federal Open Market Committee, which meets March 18-19, has cut monthly bond buying to $65 billion from $85 billion in December. Policy makers have indicated they plan to taper by $10 billion at each meeting absent a weakening in the economy.

‘$55 billion’

“After last Friday’s employment numbers, we believed they were worthy of the FOMC continuing to take $10 billion off the table every month,” Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co. in Bryn Mawr, Pa., said in a phone interview. “After the March 18-19 meeting, we should be at $55 billion a month.”

The Chicago Board Options Exchange Volatility Index, a gauge for U.S. stock volatility, rose 1.6 percent to 14.70 on Thursday. The measure has advanced 7.1 percent this year.

Six of 10 main industries in the S&P 500 fell on Thursday. Energy and technology shares dropped more than 0.4 percent.

Discount retailer Dollar General slipped 2.6 percent to $57.76 after forecasting first-quarter earnings of no more than 74 cents a share, below the 81 cents estimated by analysts.

Family Dollar Stores Inc. tumbled 1.9 percent to $60.49.

Amazon.com climbed 2.6 percent to $380.42 for the biggest gain in the S&P 500. The increase in the price of its Prime membership, by 25 percent to $99 a year, is the first since the service’s introduction nine years ago. Amazon.com has said in recent months it may raise the price of Prime, which provides two-day shipping as well as streaming online movies and TV shows, amid increasing fuel and shipping costs.

Williams-Sonoma

Williams-Sonoma jumped 10 percent to $64.98. The company forecast same-store sales growth of 5 percent to 7 percent this year, compared with the 3.7 percent average analyst projection. Revenue will reach $4.63 billion to $4.71 billion, Williams-Sonoma predicted. Analysts had estimated a number at the low end of that range, data compiled by Bloomberg show.

Activision Blizzard Inc. increased 1.8 percent to $20.98 after Bank of America Corp. raised its rating on the largest U.S. video-game publisher to buy from neutral. The brokerage predicted new releases this year, including expansion packs for its “Diablo 3,” “Destiny” and “World of Warcraft” games, could help sales reach $4.74 billion in 2014. Activision last month forecast adjusted sales of $4.6 billion.

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