US stocks fell, sending benchmark indexes to one-month lows, as a government report showing producer prices dropped in November fueled concern that corporate profit growth will falter.
Microsoft Corp, the maker of the Xbox video-game console, led the decline after Goldman, Sachs & Co said sales of video games are slowing. Waters Corp tumbled after the laboratory-instrument maker cut its earnings forecast.
"Disappointing earnings coming out here at the end of the fourth quarter, combined with pricing power going away" will hurt stock prices, Dennis Ferro, chief investment officer at Evergreen Asset Management, told Bloomberg Television. Ferro's firm oversees US$200 billion.
The Standard & Poor's 500 Index fell 12.11, or 1.3 percent, to 889.48. The Dow Jones Industrial Average declined 104.69, or 1.2 percent, to 8,433.71. The NASDAQ Composite Index slid 37.13, or 2.7 percent, to 1,362.42. For all three, Friday's close was the lowest since Nov. 13.
Indexes fell for a second week. The S&P 500 and Dow lost 2.5 percent and the NASDAQ 4.2 percent. Their last back-to-back losses occurred in the weeks ended Sept. 27 and Oct. 4. The NASDAQ had its biggest weekly decline since the latter week.
The Labor Department said its index of prices paid to factories, farmers and other producers dropped 0.4 percent last month. Economists were expecting no change, according to a Bloomberg survey.
The decline in producer prices overshadowed a survey that showed consumer confidence, buoyed partly by retailers' discounts, rose more than forecast. The University of Michigan index of consumer sentiment climbed to 87 in December from 84.2 in November. Economists were expecting an average reading of 85, according to a Bloomberg survey.
Fourth-quarter profits for the S&P 500 are expected to rise 14.9 percent, down from an average of 17 percent six weeks ago, according to a Thomson First Call survey of analysts. First-quarter earnings will grow 12 percent, compared with forecasts of 14 percent as of Oct. 1, according to First Call.
In today's trading, two stocks fell for every one that rose on the New York Stock Exchange and the Nasdaq Stock Market. Some 1.26 billion shares changed hands on the Big Board, 16 percent below the three-month daily average.
Microsoft lost US$1.67 to US$52.50. Goldman analyst Chris DeBiase said video-game sales are slowing as customers reduce spending on games and consoles. He said sales of Microsoft's Xbox console fell in November, while sales of Sony's Corp's Playstation2 rose.
Sony's US-traded shares slid US$0.80 to US$41.61.
DeBiase cut his rating on the industry to "cautious" and lowered video-game makers Electronic Arts Inc and Activision Inc to "underperform" from "in line."
Electronic Arts, the largest US publisher of video games, shed US$4.65 to US$56.70. Activision, the maker of a Spider-Man game, fell US$1.37 to US$15.45.
Take-Two Interactive Software Inc, whose Grand Theft Auto 3 is one of the best-selling video games, slid US$2.53 to US$23.36.
Waters declined US$4.39 to US$20.15. The maker of laboratory equipment for drug development cut its fourth-quarter earnings forecast to US$0.38 to 40 cents a share. Its previous target was US$0.46.
The forecast also pulled down rivals. Applied Biosystems Group dropped US$2.06 to US$18.05 and Thermo Electron Corp fell US$1.23 to US$18.75.
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