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S&P 500 falls most for week since 2012 on emerging markets slump

U.S. stocks fell for the week, giving benchmark indexes their biggest losses since 2012, as a selloff in emerging-market currencies and signs of weakness in China spurred concern that global growth will slow.

Caterpillar Inc. (NYSE: CAT), General Electric Co. (NYSE: GE) and DuPont Co. (NYSE: DD) tumbled more than 5.7 percent to lead declines in the Dow. Cliffs Natural Resources Inc. (NYSE: CLF) lost 14 percent as raw-materials producers and industrial companies tumbled more than 3.9 percent.

International Business Machines Corp. (NYSE: IBM) slid 5.5 percent as revenue declined for a seventh consecutive quarter amid weaker demand for servers. Netflix Inc. (Nasdaq: NFLX) surged 17 percent as it projected customer growth that topped analysts’ estimates.

The S&P 500 fell 2.6 percent to 1,790.29 over the four trading days, posting its largest decrease since June 2012 and retreating for the second straight week. The Dow lost 579.45 points, or 3.5 percent, to 15,879.11, for its biggest drop since May 2012.

Markets were closed Jan. 20 for the Martin Luther King Jr. Day holiday.

Data during the week showed applications for U.S. unemployment benefits held near a six-week low while purchases of previously owned homes climbed less than projected in December. In China, a report indicated factory output may contract this month, based on a preliminary Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics.

Fed officials have been scrutinizing economic data to determine the timing and pace of any reductions to their stimulus. The central bank, which next meets Tuesday, decided at its December meeting to start cutting its monthly bond purchases by $10 billion to $75 billion.

Three rounds of Fed monetary stimulus helped the S&P 500 rise as much as 173 percent from a 12-year low in 2009. The U.S. stock benchmark rallied 30 percent last year, the most since 1997. While the index reached an all-time high of 1,848.38 on Jan. 15, it has slumped 3.1 percent this year.

The Dow has lost 4.2 percent so far in 2014.

Investors also scrutinized corporate earnings during the week. Of the 122 companies in the S&P 500 that have released fourth-quarter results so far this season, 74 percent have beaten estimates for profit and 67 percent have exceeded sales projections, according to data compiled by Bloomberg.

All 10 main groups in the S&P 500 retreated as materials producers lost 4.5 percent and industrial stocks declined 4 percent. DuPont fell 6.3 percent to $59.97, GE tumbled 6.1 percent to $24.95 and Caterpillar slid 5.8 percent to $86.17. Cliffs Natural Resources plunged 14 percent to $19.33.

Whirlpool Corp. (NYSE: WHR) slumped 7.1 percent to $145.68 and Freeport-McMoRan Copper & Gold Inc. (NYSE: FXX) lost 9.5 percent to $32.77.

JPMorgan Chase & Co. (NYSE: JPM) erased 5.2 percent to $55.09 and American Express Co. (NYSE: AXP) slid 4.4 percent to $86.95, pacing a 3.8 percent drop among financial firms.

IBM dropped 5.5 percent to $179.64. The world’s biggest computer-services provider said revenue declined to $27.7 billion in the three months through December. Profit dropped at the company’s hardware unit partly because of its x86 server business, according to Chief Financial Officer Martin Schroeter.

The company agreed to sell the server division for $2.3 billion to Lenovo Group Ltd.

Advanced Micro Devices Inc. (NYSE: AMD) slumped 17 percent, the most since October 2012, to $3.47. The maker of processors for personal computers predicted that revenue will be from $1.29 billion to $1.38 billion in the first quarter. The average analyst projection had called for sales of $1.37 billion, according to a Bloomberg survey.

Johnson & Johnson (NYSE: JNJ) declined 4.7 percent to $90.61 for the largest drop since May 2010. The world’s biggest maker of health care products forecast 2014 profit of $5.75 to $5.85 a share, excluding one-time items. The outlook was below the $5.86 average of analysts’ estimates compiled by Bloomberg.

American Eagle Outfitters Inc. (NYSE: AEO) tumbled 12 percent to $12.77, the lowest level since October 2011.

Coach Inc. (NYSE: COH) lost 7.1 percent to $48.81. The largest U.S. luxury handbag maker’s sales at North American stores dropped twice as much as analysts’ estimated during the holiday shopping season. The retailer also reported quarterly profit and revenue that trailed analysts’ projections.

Netflix surged 17 percent to $386.08. The world’s largest subscription streaming service forecast customer growth ahead of analysts’ estimates and said it may charge new users more to share accounts.

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