U.S. Stocks Fluctuate as Telephone Companies, Retailers Retreat

U.S. stocks fluctuated as an analyst downgrade dragged telephone shares lower and disappointing sales at Best Buy Co. triggered a sell-off in retailers, offsetting gains in homebuilders and health-care companies.

Best Buy, the world’s largest electronics retailer, tumbled 6.2 percent after profit slumped 15 percent amid slowing demand. AT&T fell 1.5 percent after the largest U.S. phone company was cut to “equal-weight” at Barclays Plc. Lennar Corp. and Standard Pacific Corp. climbed at least 4 percent to builders higher after housing starts jumped 17 percent. Amgen Inc., the world’s largest biotechnology company, gained as Sanford C. Bernstein & Co. upgraded the shares and said earnings growth may accelerate.

The S&P 500, which surged 40 percent from a 12-year low in March through last week, slipped 0.1 percent to 923 at 11:57 a.m. New York time after gaining as much as 0.5 percent. The index slid 2.4 percent yesterday, the biggest slump since May 13. The Dow Jones Industrial Average slipped 21.16 points, or 0.3 percent, to 8,590.97.

U.S. stocks extended a global slide yesterday as falling oil and metal prices weighed on commodity producers and a weaker-than-expected report on New York manufacturing dragged down industrial shares. The S&P 500’s 40 percent rebound from a 12-year low on March 9 through last week left the index valued at 14.9 times its companies’ earnings, near the highest level since October.

Morgan Stanley said the rally in U.S. stocks may be finished after the brokerage raised its end-of-year target for the S&P 500 to 900 from 825, still 2.6 percent below yesterday’s close. “Having breached the 950 level, the rally may now be over,” Morgan Stanley strategists including New York-based Jason Todd wrote in a note to clients.

Goldman Sachs Group Inc. chief economist Jim O’Neill said financial markets may weaken in coming weeks amid concern about governments’ intentions on rolling backing stimulus packages.

“I wouldn’t be surprised if what started yesterday is the beginning of a correction that goes on a few weeks,” O’Neill said in an interview today in Monaco.