NYSE Euronext lost ground after unveiling formal plans to merge with Deutsche Börse, the main German exchange, while the wider markets fell away from 30-month highs on disappointing economic data.
Shares in NYSE were down 3.4 per cent to $38.12 after it emerged that the German exchange will own 60 per cent of the new company and have the majority of directors on the board. NYSE is still up 14 per cent since merger talks were announced, however.
The wider markets were lower following data from the Commerce Department showing that US retail sales had risen by their slowest pace since last June . Sales were up only 0.3 per cent in January against the 0.6 per cent forecast by economists.
The S&P 500 closed 0.3 per cent lower at 1,328.01, the biggest one-day fall in a month. The Dow Jones Industrial Average was 0.3 per cent lower at 12,226.64 and the Nasdaq Composite lost 0.5 per cent to 2,804.35.
In the previous session, the S&P 500 index crept to within two points of 1,333.58, which is the point where the index will have doubled since its March 2009 low.
The S&P has risen more than 23 per cent in the last six months. Given this strong run, many commentators have been forecasting a short-term fall for the few weeks. “The markets are poised for a sell-off, it just needs a trigger,” said Dick Del Bello, senior partner at Conifer Group.
Energy stocks saw the sharpest losses as oil prices softened. ExxonMobil was 2.3 per cent lower at $82.97 while Marathon Oil was down 2 per cent at $48.07. The S&P energy index lost 1.1 per cent. ExxonMobil lost ground in spite of reporting that it had added 3.5bn barrels of oil equivalent to its proved reserves last year.
There was also an element of profit-taking in the sector following a run that has seen energy stocks put on 45 per cent since the start of September.
Elsewhere in the sector, an Ecuadorian court ordered Chevron to pay up to $8.6bn in damages for environmental damage dating back 40 years but the markets seemed largely unruffled by the news. Chevron was only 0.6 per cent lower at $96.34.
The wider markets were also weighed down by news that homebuilder sentiment had remained unchanged at its low levels in February, according to the housing market index from the National Association of Homebuilders.
“Unfortunately for builders, there is a massive supply overhang of existing homes, which will present brutal competition to the new home market in the foreseeable future,” said Joshua Shapiro, chief US economist at MFR.
In more positive economic news, data from the Bank of New York’s Empire State Manufacturing Survey showed that manufacturing activity had expanded in February.
Also, the Empire State’s business conditions index rose to 15.43, which was ahead of the 11.92 reading last month and the 15 expected by economists.
FedEx cut its earnings forecast for the third quarter of 2011 by at least 22 per cent, blaming the move on bad weather and volatile fuel prices that have increased expenses and reduced revenues. But this failed to drag down its shares, as the forecast was largely expected. FedEx rose 2.1 per cent to $95.98.
The delivery company now expects adjusted earnings to be between 70-90 cents per share for the three months to the end of February, down from previous forecasts of between 95 cents and $1.15.
A series of ratings downgrades hurt individual stocks. JDS Uniphase, a maker of optical communications, fell 10.2 per cent to $25.05 after Sanford C Bernstein & Co cut its rating on the stock to “market perform” from “outperform”.
Netflix was down 2.7 per cent to $240.79 after Morgan Stanley downgraded the video rental and streaming company to “equal weight” from “overweight”.
Qwest Communications International was down 3 per cent to $7.20 after the company reported a fourth-quarter loss caused by a series of one-time charges.
Dell, the PC maker, was up 0.2 per cent to $13.92 in anticipation of its quarterly results. After the closing bell, earnings came in at 53 cents a share ahead of estimates of 37 cent per share.
Sirius XM Radio, the satellite radio company, was down 7.9 per cent to $1.69 after reporting a fourth-quarter loss, although the number of subscribers grew. Sirius reported a fourth-quarter loss of $81.4m from a profit of $11.9m in the same period a year earlier.
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