U.S. stocks fell for a fourth day as biotechnology shares slumped and raw-material producers sank amid an unexpected decline in Chinese manufacturing, overshadowing a rally in Amazon.com Inc.
Biogen Inc. lost 19 percent after cutting its 2015 earnings forecast. Raw-material and energy shares in the Standard & Poor’s 500 Index fell at least 1.9 percent. Amazon surged 14 percent, while Visa Inc. gained 4.2 percent after profits beat predictions. An index of homebuilders decreased 2.2 percent after new-home sales unexpectedly dropped.
The S&P 500 Index slipped 0.7 percent to 2,088.17 at 12:56 p.m. in New York, below its average price during the past 100 days. The Dow Jones Industrial Average lost 114.22 points, or 0.6 percent, to 17,617.70. The Nasdaq Composite Index decreased 0.4 percent.
“We’re right in the thick of earnings and today has seen some disappointing results, which is pushing stocks down as the day goes along,” said Joe Bell, a Cincinnati-based senior equity analyst at Schaeffer’s Investment Research Inc. “We got some weak numbers out of China and that’s adding to the selling pressure.”
A private gauge of Chinese manufacturing unexpectedly fell to the lowest in 15 months, reinforcing the need for further policy support in an economy that had seen signs of stabilization recently. A separate report showed sales of new homes in the U.S. surprisingly dropped to a seven-month low, painting a picture of less robust improvement during the industry’s busiest time of year.
Weekly Performance
The S&P 500 has lost 1.8 percent this week, and is headed toward its fourth weekly decline out of five. The gauge is 2 percent away from its May record, after sliding as much as 4 percent from the high as concerns about Greece’s debt crisis and China’s stock market rout weighed on sentiment.
Investors are also watching economic reports for clues on when the Federal Reserve will start raising interest rates. Along with the housing data, a separate report today said a July gauge of U.S. manufacturing improved slightly from the weakest reading since October 2013.
Economists surveyed by Bloomberg continued to put the odds for a September rate increase at 50 percent, even after Greece and China temporarily rocked markets. Fed policy makers gather for a two-day meeting on Tuesday and Wednesday next week.
Fifteen S&P 500 companies report quarterly results Friday. Analysts now call for a 4 percent drop in second-quarter profit for the equity gauge’s members, shallower than July 17 estimates for a 5.3 percent decline.
Sector Moves
The Chicago Board Options Exchange Volatility Index rose 8.3 percent Friday to 13.39. The gauge, know as the VIX, is up 15 percent for the week after it tumbled 29 percent last week, the biggest such slide since January.
Seven of the S&P 500’s 10 main groups retreated, led by raw-materials, health-care and energy. Biogen Inc. plummeted 19 percent, the biggest drop in seven years, after the biotech company lowered its forecast for 2015 profit and sales, revising expectations for growth as its top-selling multiple sclerosis drug faces tougher competition.
The Nasdaq Biotechnology Index fell 2.2 percent. Gilead Sciences Inc. and Celgene Corp. declined at least 1.3 percent, while Vertex Pharmaceuticals lost 1.9 percent.
Materials, Energy
Raw-material stocks in the index slipped 1.9 percent. A gauge of commodities dropped 1.1 percent to its lowest level since March 18. Freeport-McMoRan Inc., the copper miner that bet big on the energy market two years ago, fell 7.8 percent to its lowest since Feb. 2009 after it failed to offer investors a plan to withstand plunging prices for almost everything it produces.
Dow Chemical Co sank to a four-month low, down 2.7 percent and falling for a sixth day, the longest losing streak in a year. DuPont Co. decreased 2.5 percent to its lowest in nearly 18 months.
The S&P 500 energy index tumbles as crude oil fell for a third day. The resource is down more than 5 percent for the week. Cabot Oil & Gas Corp. slid 4 percent, on track for a nearly six-month low. The company reported revenue and profit that fell short of consensus analyst estimates. Chevron Corp. lost 2.4 percent to its lowest since Oct. 2011, and Exxon Mobil Corp. fell 1.5 percent.
Amazon Soars
Capital One Financial Corp. dropped 12 percent, the most in almost four years, after reporting a profit that missed analysts’ estimates as the lender set aside $1.1 billion to cover credit losses.
Consumer discretionary companies in the benchmark index helped offset some weakness, up 0.8 percent as Amazon rose as much as 20 percent to an all-time high. The Web retailer posted a surprise profit that showed investors it can make money when it puts brakes on investments.
Amazon is now the world’s biggest retailer by market value, surpassing Wal-Mart Stores Inc. Amazon’s chairman and largest shareholder Jeff Bezos added more than $7 billion to his personal fortune on the share price move.
Starbucks Corp. gained 2.3 percent to a record after posting a quarterly profit that topped analysts’ estimates, helped by new beverages and the growth of its loyalty program.
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