Jan. 31 (Bloomberg) -- U.S. stocks fell, sending the Standard & Poor’s 500 Index to its worst January since 2010, as earnings reports at Amazon.com Inc. and Mattel Inc. disappointed investors and turmoil in emerging markets continued.
Amazon slumped 11 percent after the world’s largest Web retailer reported profit and sales that trailed analysts’ estimates. Mattel Inc. sank 12 percent after a drop in Barbie sales weighed on results. Google Inc. jumped 4 percent, pacing gains in technology shares, after sales topped estimates on growing advertising spending during the holiday season.
The S&P 500 retreated 0.7 percent to 1,782.43 at 4 p.m. in New York. The index fell 0.4 percent over the past five days for a third week of losses, the longest streak since May 2012. The Dow Jones Industrial Average dropped 149.76 points, or 0.9 percent, to 15,698.85, the lowest in almost three months. About 7.8 billion shares changed hands on U.S. exchanges today, 25 percent above the three-month average.
“It seems investors can expect increased volatility and more modest returns as the year unfolds,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said in a phone interview from Minneapolis. He helps oversee $112 billion. “We need earnings to drive the market to meaningfully higher levels and to do that you need an improving economy. We’ll get a better read on that over the next week.”
The S&P 500 fell as much as much as 1.2 percent today to 1,772.26, approaching its lowest level since Dec. 18.
“The bulls are defending their turf,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said by phone. “When you see those December lows start to hold tough, that’s the bulls starting to sink their teeth in and defend.”
The S&P 500 fell 3.6 percent in January, its first monthly decline since August, as emerging-market currencies slumped amid signs China’s economy is slowing. While the benchmark has retreated in January 24 times since 1950, the gauge ended the year lower than its Jan. 31 reading in only 11 of those years, according to data compiled by MKM Partners LLC. A lower start to the year resulted in a full-year decline for the index 58 percent of the time.
The S&P 500 last fell to start the year in 2010, when the gauge rallied 17 percent in the next 11 months to finish the year with a 13 percent gain.
A report today showed consumer spending climbed more than forecast in December even as incomes stagnated. Household purchases, which account for about 70 percent of the U.S. economy, rose 0.4 percent, after a 0.6 percent gain the prior month that was larger than previously estimated, Commerce Department figures showed. Incomes were unchanged, pushing the saving rate to the lowest level in almost a year.
The Thomson Reuters/University of Michigan final January index of consumer sentiment fell to 81.2 from 82.5 a month earlier. The median forecast of 68 economists in a survey called for 81 after a preliminary reading of 80.4. Estimates ranged from 79 to 82.5. The index averaged 89 in the five years before December 2007, when the last recession began, and 64.2 in the 18-month contraction that ended in June 2009.
Earlier this week, the Federal Reserve decided to reduce its monthly bond purchases by $10 billion. Three rounds of U.S. monetary stimulus helped the S&P 500 rise as much as 173 percent from a 12-year low in 2009.
“I’m really bearish and defensive at the moment,” Daniel Weston, a fund manager at Aimed Capital GmbH in Munich, said by telephone. “Amazon was a big concern because the earnings were a reflection on the consumer. I’m concerned about growth and inflation coming off, continuing to trend lower.”
The Chicago Board Options Exchange Volatility Index rose 6.5 percent today to 18.41. The gauge of S&P 500 options known as the VIX has gained 34 percent this year.
About 79 percent of the companies in the measure that have posted earnings this season exceeded analysts’ projections. Profit at S&P 500 companies probably rose 8.3 percent in the fourth quarter of 2013 and sales increased 2.6 percent, analysts’ estimates compiled by Bloomberg show.
Seven out of the 10 main industries in the S&P 500 fell today, as energy producers, consumer-discretionary companies and financial firms led declines. Utilities advanced 0.8 percent for the top gain.
Amazon tumbled 11 percent, the most in two years, to $358.69. The Seattle-based company said after yesterday’s market close that earnings rose to 51 cents a share in the fourth quarter, falling short of the 69-cent profit that analysts projected on average. Sales growth slowed outside the U.S., while holiday shipping costs surged. Revenue rose 20 percent to $25.6 billion, trailing the $26.1 billion average estimate.
MasterCard Inc. slid 5.1 percent to $75.68. The second- biggest U.S. payments network reported fourth-quarter profit that missed analysts’ estimates as expenses climbed 11 percent.
Mattel sank 12 percent to $37.84. The world’s largest toymaker reported that fourth-quarter profit climbed 20 percent to $1.07 a share, missing the $1.20 that analysts had estimated. Sales dropped 6.3 percent to $2.11 billion, compared with projections for $2.37 billion.
Google Inc. climbed 4 percent to an all-time high of $1,180.97. The search provider said fourth-quarter revenue excluding sales passed on to partners rose 11 percent to $13.6 billion, topping estimates of $13.4 billion. Retailers spent more on advertising during the holidays, making up for lower ad prices.
Zynga Inc. surged 24 percent, the most since it started trading three years ago, to a record $4.40. The company, known for its “FarmVille” and casino-style games, will fire about 15 percent of its staff, mostly at its San Francisco headquarters. Zynga agreed to buy U.K.-based NaturalMotion Ltd. for $527 million, according to a statement yesterday.
Chipotle Mexican Grill Inc. jumped 12 percent to $551.96, an all-time high. The burrito chain said fourth-quarter profit rose 30 percent as more customers visited its stores.
Tyson Foods Inc. rallied 8.4 percent to a record $37.40. The largest U.S. meat processor reported first-quarter profit that beat analysts’ estimates as sales of chicken, beef and pork rose.
Computer Sciences Corp. advanced 9.5 percent to $60.41, the highest since July 2007. The technology company whose clients include NASA and Avis Budget Group Inc. raised its profit forecast after third-quarter earnings exceeded analysts’ estimates.
An S&P 500 index of homebuilders gained 2.6 percent, reaching the highest level since May. PulteGroup Inc. added 2.8 percent to $20.32 and Lennar Corp. rose 3.4 percent to $40.16.
JDS Uniphase Corp. climbed 4.5 percent to $13.29. The provider of network analytics forecast sales in the third quarter will be as much as $440 million, exceeding the $427.5 million estimated by analysts.
Wynn Resorts Ltd. added 7.9 percent to a record $217.42. The casino company controlled by billionaire Steve Wynn reported fourth-quarter earnings that beat analysts’ estimates as revenue in Macau surged.
--With assistance from Inyoung Hwang in London. Editors: Michael P. Regan, Jeremy Herron