By Callie Bost and Joseph Ciolli
U.S. stocks fell, after the Standard & Poor’s 500 Index lost the most in five weeks yesterday, as talks with Russia failed to end a standoff over the Crimea ahead of Sunday’s referendum.
The S&P 500 lost 0.3 percent to 1,841.13 at 4 p.m. in New York. The equity gauge had its biggest weekly decline since January, after closing at an all-time high on March 7.
“I think we’ve been kind of expecting volatility right now,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said in a phone interview. His firm manages $1.1 billion. “There’s a lot of different stuff going on in the world.”
The S&P 500 erased its gain for the year yesterday as weaker-than-forecast economic data from China and escalating tension in Ukraine overshadowed reports showing an improving U.S. economy. The index fell 2 percent for the week, and is down 0.4 percent for 2014.
U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov failed to make progress on ending the Ukraine crisis in six hours of talks in London, as the Crimea peninsula prepared to vote on joining Russia.
Russian President Vladimir Putin “is not prepared to make any decision regarding Ukraine until after the referendum on Sunday,” Kerry told a news conference today. Russia “will respect the will of the Crimean peoples” when the peninsula votes in two days on seceding from Ukraine, Lavrov told a separate news conference, in which he said there’s was “no common vision” on resolving the crisis.
The U.S. and the European Union are threatening sanctions against Russia if it doesn’t back down from annexing Crimea. Ukraine’s Kiev-based cabinet says Russia has taken over the southern region and is massing troops on its border.
“Everyone is watching this Ukraine situation, not knowing what to make of it,” John Carey, a fund manager at Pioneer Investment Management Inc., a Boston-based firm that manages about $220 billion worldwide, said by phone. “Consumer confidence was a little low although I think people still need to coincide what the weather has done to the data. People are realizing the market is OK if we don’t have a real setback internationally.”
Consumer confidence in the U.S. unexpectedly dropped in March to a four-month low, indicating household spending may be slow to pick up from a weather-related setback earlier this year. The Thomson Reuters/University of Michigan preliminary index of sentiment fell to 79.9 this month from 81.6 in February.
A separate report showed producer prices dropped in February, held back by the biggest decrease in the cost of services in almost a year. The 0.1 percent decrease in the producer-price index followed a 0.2 percent rise the prior month.
The Federal Reserve is trying to determine how much recent economic data has been affected by weather. Chair Janet Yellen said last month the U.S. economy was strong enough to withstand measured reductions to the central bank’s monthly bond purchases.
The Federal Open Market Committee, which meets March 18-19, has cut monthly bond buying to $65 billion from $85 billion in December. Policy makers have indicated they plan to taper by $10 billion at each meeting absent a weakening in the economy.
Three rounds of Fed stimulus have helped push the S&P 500 up 172 percent from a 12-year low, as U.S. equities begin the sixth year of a bull market that started March 9, 2009.
--With assistance from Sofia Horta e Costa in London.