.S. stocks retreated, following yesterday’s rally, as a report showed weakening retail sales while borrowing costs rose in Italy and Germany.
The Standard & Poor’s 500 Index lost 0.4 percent to 1,318.89 at 9:31 a.m. New York time. The benchmark gauge rose 1.2 percent yesterday.
“It’s a tough recipe,” Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “Consumers are starting to question the validity of this recovery and beginning to plan for tougher times. At the same time you have global austerity. You’re getting more recessionary pressures throughout Europe and borrowing costs are moving higher. Things are deteriorating.”
Equities slid as retail sales in the U.S. fell in May for a second month as slower employment and subdued wage gains damped demand, a sign the largest economy is cooling. Spain and Italy appealed to European policy makers to step up their response to the financial crisis after a 100 billion-euro ($125 billion) lifeline for Spanish banks failed to calm markets.
Stocks rose yesterday amid speculation the Federal Reserve will take steps to stimulate the economy and after the European Central Bank endorsed a plan to guarantee bank deposits. The policy-setting Federal Open Market Committee meets next week.
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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