COMMENTARY | COLUMNISTS | GEORGE CHAMBERLIN

S&P 500 has biggest drop since November on Europe debt concern

Renewed concerns about economic conditions in Europe led to a selloff in stock prices Monday.

The Dow Jones Industrial Average, after rising for five consecutive weeks, fell 129.71 points to 13,880.08. The Nasdaq Composite Index was down 47.93 points to 3,131.17 and the S&P 500 Stock Index lost 17.46 points to 1,495.71.

On the day, the Nasdaq fell 1.51 percent, the S&P 500 fell 1.15 percent and the Dow declined 0.93 percent.

The financial markets reacted last week to a series of economic report including updates from the Department of Labor showing U.S. payrolls rose by 157,000 in January and original readings for November and December were revised higher.

Oil prices fell on Monday after rising sharply last week. Crude closed at $96.17 a barrel, down $1.60. Gold rose $5.80 to $1,676.40 an ounce.

All 10 groups in the S&P 500 fell at least 0.5 percent. Wal-Mart Stores Inc. (NYSE: WMT) dropped 1.2 percent as JPMorgan Chase & Co. (NYSE: JPM) cut its rating on the stock. Gannett Co. (NYSE: GC) erased 6.7 percent on concern TV revenue growth won’t be enough to compensate for weak print advertising. Herbalife Ltd. (NYSE: HLF) rose 1.3 percent after the Federal Trade Commission corrected an erroneous statement that said the company was the subject of a law-enforcement probe.

Yum! Brands Inc. (NYSE: YUM) and Sysco Corp. (NYSE: SYY) are among 13 companies in the S&P 500 that report earnings Monday. About 73 percent of the 264 companies from the gauge that have released results this earnings season have exceeded profit projections, and 66 percent have beaten sales estimates, according to data compiled by Bloomberg.

Orders placed with factories increased less than forecast in December, reflecting a drop in non-durable goods that overshadowed gains in construction equipment and computers. Bookings climbed 1.8 percent after a revised 0.3 percent drop in November that was initially reported as unchanged, Commerce Department figures showed. The Bloomberg survey median called for a 2.3 percent gain.

McGraw-Hill Cos. (NYSE: MHP) sank 14 percent to $50.30. The U.S. Justice Department intends to file a civil lawsuit against S&P based on ratings in 2007 of certain collateralized debt obligations, the company said Monday. The Justice Department and state prosecutors may file civil charges this week against S&P, owned by McGraw-Hill, alleging wrongdoing in its ratings of mortgage bonds in the lead up to the 2008 financial crisis, according to two people familiar with the matter.

“A DOJ lawsuit would be entirely without factual or legal merit,” the company said in a statement.

Chevron Corp. (NYSE: CVX) lost 1.1 percent to $115.20. UBS cut its recommendation on the energy company to neutral from buy, citing the stock’s recent rally. The shares have gained 6.5 percent this year.

Oracle Corp. (Nasdaq: ORCL) slipped 3 percent to $35.13. The largest maker of database software agreed to buy Acme Packet Inc. (Nasdaq: APKT) for $1.7 billion, or $29.25 a share. Acme surged 24 percent to $29.59. Acme’s tools to transmit voice and video via the Web may help Oracle challenge Cisco Systems Inc. (Nasdaq: CSCO) in networking -- a market that’s benefiting from the boom in mobile devices.

Merck & Co. (NYSE: MRK) lost 2.3 percent to $40.85. The drugmaker was cut to underweight from equalweight by Morgan Stanley, which cited concern the company’s Improve-It study of cholesterol drug Vytorin may fail when interim data is reviewed in March, hurting chances for experimental drug anacetrapib.

Humana Inc. (NYSE: HUM) jumped 4.7 percent to $78.86. The company reported fourth-quarter earnings of $1.19 a share, exceeding the $1.07 a share estimated by analysts on average.


Bloomberg News contributed to this report.


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