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S&P 500 Retreats From Record Levels as Commodity Shares Slump

March 11 (Bloomberg) -- U.S. stocks fell, after the Standard & Poor’s 500 Index climbed to a record last week, as commodity shares slumped with copper and oil prices amid concern over China’s economy.

The S&P 500 fell 0.5 percent to 1,867.64 at 4 p.m. in New York. The benchmark index closed at an all-time high of 1,878.04 on March 7.

“China is a big importer of copper and intraday that triggered a little bit of fear in equities,” Joe Bell, senior equity analyst at Cincinnati-based Schaeffer’s Investment Research Inc., said by phone. “Copper is somewhat related to the health of the global economy, so that could have pushed people to take some money off the table.”

Commodities shares declined at least 1 percent today, with Freeport-McMoRan Copper & Gold Inc. dropping 2.1 percent to $30.72. Copper futures slid as much as 3 percent to the lowest level since July 2010 as signs of slowing economic growth in China sparked concern demand will slump.

China’s credit growth trailed analysts’ estimates in February, the People’s Bank of Chain said yesterday. China had its first onshore bond default after Shanghai Chaori Solar Energy Science & Technology Co., a solar-panel maker, last week failed to make an interest payment.

“People are starting to reevaluate the China demand scenario, not only from economic data, but also from this first ever corporate-debt default inside the country,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “How many more companies out there are going to default?”

Military Drills

The S&P 500 fell less than 0.1 percent yesterday as a report showed Chinese exports unexpectedly declined last month and Ukraine began military drills.

The S&P 500 rallied 4.3 percent in February after Federal Reserve 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 Fed is trying to determine how much of the recent economic cooling has been due to weather. U.S. employers added more workers than estimated in February, a Labor Department report showed last week. Other reports indicated manufacturing expanded faster than projected last month, while consumer spending rose more than estimated in January.

‘Weather Related’

“The equity market is going to make continued progress in a two-steps-forward, one-step-back kind of progression,” Jim Russell, who helps oversee $115 billion as a senior equity strategist for U.S. Bank Wealth Management, said by phone. “We’re still evaluating how much of the economic weakness is weather related and how much of it is legitimate.”

Investors also continued to watch the situation in Ukraine. Russia is wresting control of Ukraine’s Crimean peninsula, home to its Black Sea Fleet, sparking the worst crisis between Russia and the West since the Cold War. The European Union told Russia it must switch course in Crimea by next week or risk more sanctions as Ukraine’s deposed president warned of a possible civil war.

Ukraine’s Interior Minister Arsen Avakov said today the country may mobilize 20,000 people to protect its borders. Ukraine says Russia has almost 19,000 soldiers in Crimea, which holds a referendum on March 16 on whether to secede.

Investors have added $13.1 billion to U.S. equity exchange- traded funds in the past five days and withdrawn $8.2 billion from bond ETFs, data compiled by Bloomberg show. Real-estate stocks absorbed the most money among industry ETFs, taking in $564 million during the past week.

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