S&P 500 drops below 2,000 on Ukraine conflict as retailers slump

New York: US stocks fell, sending the Standard & Poor’s 500 Index below 2,000, as violence in Ukraine intensified and retailers reported disappointing earnings.

Williams-Sonoma Inc. tumbled 11% after its third-quarter earnings forecast missed analysts’ estimates. Abercrombie & Fitch Co. declined 6% as second-quarter sales fell more than analysts had projected. Guess? Inc. sank 8.9% after the retailer cut its annual earnings forecast.

The S&P 500 dropped 0.2% to 1,995.69 at 11:06 am in New York, heading for the biggest drop since 7 August. The Dow Jones Industrial Average slid 56.25 points, or 0.3%, to 17,065.76. The Nasdaq Composite Index retreated 0.2%.

“What’s weighing on the market is that the reheating in tensions between Russia and Ukraine keeps investors on edge,” Alan Gayle, who helps oversee about $50 billion as director of asset allocation for RidgeWorth Investments in Atlanta, said by phone. “The other is, after hitting the psychological level of 2,000, what’s next for the market?”

The US equity index has rebounded 4.4% from a three-month low on 7 August on speculation the Federal Reserve will keep interest rates low as the economy strengthens. The S&P 500 closed above 2,000 for the first time on 26 August.

The US stock market is seeing the slowest trading in at least six years as investors leave for vacation before Labour Day. Volume has been below 5 billion shares over the past seven days, the longest streak in data compiled by Bloomberg going back to 2008. For S&P 500 companies on Thursday, volume was 27% below the 30-day average at this time.

Light Volume

“There’s going to be light volume going into a holiday regardless, but now you have these geopolitical concerns that are playing into that as well,” Bob Landry, executive director and portfolio manager at San Antonio-based USAA Investment Management Co., said via phone. He helps manage $22.3 billion.

Ukrainian President Petro Poroshenko called an emergency security meeting to defend against what he called a de facto Russian incursion. France and Germany threatened President Vladimir Putin’s government with further sanctions after pro-Russian insurgents widened their attacks on government forces, taking several towns outside their strongholds of Donetsk and Luhansk, including near the Sea of Azov.

Economy Watch

The US economy expanded more than previously forecast in the second quarter, propelled by the biggest gain in business investment in more than two years. Gross domestic product (GDP) rose at a 4.2% annualized rate, up from an initial estimate of 4% and following a first-quarter contraction, commerce department figures showed.

Williams-Sonoma slid 11% to $66.77. The seller of cookware and home furnishings forecast third-quarter earnings of 58 cents to 63 cents a share. The average analyst projection in a Bloomberg survey was for 66 cents.

Abercrombie fell 6% to $41.35. The company is struggling to compete with fast-fashion companies such as Forever 21 and Hennes & Mauritz AB, which have won over teens with their ability to react to trends quickly.

Guess lost 8.9% to $23.36. Full-year adjusted profit will be $1.05 to $1.20 a share, lower than its May forecast of $1.40 to $1.60.

Whole Foods Market Inc. slid 2.3% to $38.89. Kurt Frederick, an analyst at Wedbush Securities Inc., initiated coverage of the stock with a neutral rating.

Repros Therapeutics jumped 11% to $20.26, the highest since March, after data released on Wednesday showed the company’s testosterone treatment Androxal was superior to AbbVie’s on market topical gel, AndroGel, in secondary hypogonadism. Bloomberg

Namitha Jagadeesh in London also contributed to this story.