U.S. Stocks Fluctuate Following Decrease in Consumer Confidence

By Rita Nazareth

March 12 (Bloomberg) -- U.S. stocks drifted between gains and losses a day after the Standard & Poor’s 500 Index closed at a 17-month high as a drop in consumer confidence overshadowed an unexpected increase in retail sales

Declines in Walt Disney Co. and Boeing Co. dragged on the Dow Jones Industrial Average as the decrease in the Reuters/ University of Michigan preliminary consumer sentiment index signaled continuing concern over the job market. Pfizer Inc. slid 1.3 percent after its drug failed to halt the progression of advanced breast tumors. Supervalu Inc. surged 5.3 percent on takeover speculation.

“It looks like confidence is beginning to wane,” said Michael Mullaney, who manages $9 billion at Fiduciary Trust Co. in Boston. “Confidence is going to suffer until we get real improvement on the jobs front. In addition, the stock market is a little bit extended right now. It wouldn’t surprise me if get a minor pullback from here.”

The S&P 500 fell 0.2 percent to 1,148.4 at 12:44 p.m. in New York. The Dow slipped 8.08 points, or less than 0.1 percent, to 10,603.76. Both gauges advanced 0.3 percent earlier.

U.S. stocks rose for a third day yesterday, sending the S&P 500 Index to the highest level since October 2008, as Citigroup Inc. led a rally in bank shares.

The S&P 500 closed at a 15-month high of 1,150.23 on Jan. 19, and then plunged 8.1 percent through Feb. 8 on concern that European nations including Greece will fail to pay back debt and speculation that the Fed will need to rein in emergency stimulus measures as the economy improves. The index has since erased that loss to extend its rebound since March 9, 2009, to 70 percent through yesterday.

Drugmakers Slump

Health-care stocks had the second-biggest decline among 10 groups in the S&P 500, dropping 0.7 percent collectively.

Pfizer retreated 1.3 percent to $17.07. The world’s largest drugmaker said the cancer drug Sutent failed to halt the progression of advanced breast tumors in two studies. The company also stopped a trial of an experimental medicine to treat lung malignancy.

Abbott Laboratories fell 3.1 percent to $53.82. The maker of the arthritis medicine Humira was cut to “sell” from “hold” at Citigroup Inc., which said the company may face “underlying profitability trouble” this year.

United Technologies Corp. slipped 0.9 percent to $71.36. The maker of Pratt & Whitney jet engines said it expects 2010 earnings per share of $4.40 to $4.65. The average estimate of analysts surveyed by Bloomberg was $4.64 a share.

Schwab, Pall

Charles Schwab Corp. sank 2.4 percent to $18.64. after saying it expects first-quarter earnings to be as much as 4 cents a share lower than its fourth-quarter results. Fourth- quarter net income was 14 cents. The average estimate of analysts surveyed by Bloomberg was for a first-quarter profit of 15 cents a share.

Pall Corp. slumped 4.8 percent to $38.90. The producer of filters for drugmakers and refineries forecast 2010 earnings excluding some items of $2.05 a share at most. On average, the analysts surveyed by Bloomberg estimated profit of $2.07.

CF Industries Holdings Inc. lost 4 percent to $96.56 after Agrium Inc. said it will let its $5.43 billion offer for the fertilizer producer expire and won’t try to elect nominees to CF’s board.

Separately, Yara International ASA declined to raise its $4.1 billion offer for Terra Industries Inc., leaving the way open for rival suitor CF Industries. Terra said March 10 it favored a $4.71 billion offer from CF Industries and planned to terminate an earlier agreement with Yara unless the Norwegian company counterbid. Terra’s shares fell 1.4 percent to $46.25.

Retail Sales

Benchmark indexes advanced at the start of trading after the Commerce Department said purchases at U.S. retailers increased 0.3 percent last month, compared with a 0.2 percent drop forecast in a Bloomberg survey of economists.

“While I don’t have any reason to think the 2010 equity market will be as strong as 2009 was, you can probably have a reasonably close to average year,” said Stephen Wood, who helps manage $176 billion as chief market strategist for Russell Investments in New York. “There’s going to be a measureable, discernable upward bias. It’s going to be a grinding slog, but the equity market will be up higher a year from now than it is today.”

Retailers Rally

A gauge of S&P 500 retailers advanced 0.4 percent.

Sears Holdings Corp. and Macy’s Inc, the largest U.S. department-store companies, gained at least 1.4 percent.

Monsanto Co. rose 1.4 percent to $72.58. The company, facing antitrust probes into its genetically modified seeds, may benefit from previous court rulings in which intellectual property rights trumped competition concerns, according to antitrust lawyers.

Supervalu Inc. surged 5.3 percent to $16.92 on speculation the second-largest grocery chain will be acquired.

RF Micro Devices Inc. advanced 4.6 percent to $4.95. The maker of semiconductor products rose after it was picked by CNBC’s “Mad Money” television show host Jim Cramer on potential growth and market-share gains.