(Bloomberg) — U.S. stocks fell, after the biggest Standard & Poor’s 500 Index rally since April, as concern over geopolitical tensions kept investors on the sidelines before major companies report earnings.
Hasbro Inc. fell 2.5 percent after reporting revenue that missed analysts’ estimates. BB&T Corp. slid 3.6 percent as adjusted profit fell short of targets. Reynolds American Inc. dropped 1.7 percent after a jury ordered a unit of the company to pay a Florida woman $23 billion for her husband’s death from lung cancer. Halliburton Co. gained 1.5 percent after reporting that second-quarter revenue topped estimates.
The S&P 500 lost 0.4 percent to 1,970.82 at 9:45 a.m. in New York. The Dow Jones Industrial Average dropped 72.12 points, or 0.4 percent, to 17,028.06. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.
“The geopolitical situation is an overarching damper on the market and underneath that this week we’re right in the heart of second quarter earnings,” Matthew Kaufler, manager of Federated Investor Inc.’s Clover Value Fund, said in an interview. “While the market is net focused on earnings, we’re still trying to keep a pulse on what’s going on around the world.”
A total of 10 S&P 500 companies are reporting earnings today, including Chipotle Mexican Grill Inc., Netflix Inc. and Botox-maker Allergan Inc. Some 140 companies in the gauge report this week.
The S&P 500 rallied 1 percent on July 18, rebounding from its biggest loss since April 10 that came after the downing of a Malaysian Airlines passenger jet in Ukraine and the Israeli ground invasion of the Gaza Strip.
European Union foreign ministers meeting in Brussels tomorrow will consider tougher sanctions on Russian individuals and companies as world leaders pressure Putin to do more to end the violence in eastern Ukraine.
In the Middle East, diplomatic efforts to end two weeks of Gaza Strip fighting intensified after battles killed dozens of Palestinians and 13 Israeli soldiers in the conflict’s bloodiest single day.
The S&P 500 ended last week up 0.5 percent, rallying on the final day after better-than-estimated sales at Google Inc., the world’s third-largest company, spurred a rebound in shares. The equities benchmark has advanced 7 percent this year through July 18 amid better-than-estimated corporate earnings and central bank stimulus as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter.
The gauge closed at a record 1,985.44 on July 3 and trades at 18 times reported earnings, near the highest level in four years. The index has not had a drop of more than 10 percent since 2011.
“People are naturally cautious against these geopolitical events and the market having had such a strong rally,” said Patrick Spencer, the London-based head of equity sales at Robert W. Baird & Co., which oversees more than $100 billion. “Markets are nervous given we haven’t had a correction yet so people are thinking we’re overdue. People are just looking for reasons for the market to sell off.”
The Chicago Board Options Exchange Volatility Index jumped 8 percent to 13.02. The gauge known as the VIX was little changed last week.
About 76 percent of S&P 500 companies that have posted results this season have beaten analysts’ estimates for profit, while 68 percent exceeded sales projections, according to data compiled by Bloomberg.
Earnings at the index’s members probably rose 6.2 percent in the second quarter, while sales gained 3.3 percent, according to analyst estimates compiled by Bloomberg.
All of the 10 main groups in the gauge retreated today, with health-care shares sliding 0.7 percent to pace declines. UnitedHealth Group Inc. dropped 1.5 percent for the steepest slide in the Dow.
Hasbro lost 2.5 percent to $51.89. The toys and game maker reported second-quarter revenue that fell short of estimates. Rival Mattel Inc. last week said earnings and sales fell short of forecasts.
BB&T sank 3.6 percent to $37.50. North Carolina’s second- largest bank reported profit that missed estimates and disclosed that the U.S. Department of Housing and Urban Development is auditing its originations of government-backed loans.
Reynolds retreated 1.7 percent to $57.64. A jury ordered one of the company’s units to pay a Florida woman punitive damages for the 1996 death of her husband. Since a Florida Supreme Court decision in 2006, individual plaintiffs in the state have been awarded large verdicts, with most of those being reduced on appeal.
Halliburton added 1.5 percent to $72 after reporting that sales beat the average analyst estimate. The company also boosted its share buyback to $6 billion.
EMC Corp. rallied 4.3 percent to $28.13 after the Wall Street Journal reported that Elliott Management Corp. bought a stake in the maker of storage computers for more than $1 billion.