U.S. Stocks Fluctuate Before Economic Data; Netflix Advances

U.S. stocks fell, sending the Standard & Poor’s 500 Index lower for the first time in four days, amid concern European Union leaders won’t find an immediate solution to the region’s debt crisis.

Walgreen Co. (WAG), the largest U.S. drugstore chain, sank 7.2 percent as profit margin fell short of analyst estimates. Carnival Corp. (CCL), the world’s biggest cruise-line operator, fell 2.5 percent after forecasting profit that missed analyst projections. Sprint rallied 2.9 percent after Raymond James & Associates raised its rating to "strong buy." Netflix gained 3.2 percent after as Credit Suisse Group AG lifted its rating.

The S&P 500 fell 0.3 percent to 1,294.43 at 11:05 a.m. in New York. The gauge had rallied 3.3 percent over the previous three sessions. The Dow Jones Industrial Average declined 20.55 points, or 0.2 percent, to 12,015.98 today. Irish and Greek two- year notes sank, leading the securities of Europe’s most indebted nations lower.

“The market is trading on the headlines,” said Tom Wirth, senior investment officer for Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. York. “Things can change from minute to minute. Whenever you get things that are unknown, you start to price in higher risk. Of course, you want to buy at the bottom when the fear is so prevalent in the market. It’s just that there are too many unknowns right now.”
Nuclear Meltdown

U.S. stocks rallied yesterday as concern eased that Japan will suffer a nuclear meltdown and after AT&T Inc. (T) agreed to buy T-Mobile USA Inc. for $39 billion. The S&P 500 has still declined for two consecutive weeks after Japan’s worst earthquake on record caused a nuclear power plant to discharge radioactive vapor and Libya’s Muammar Qaddafi attacked rebels seeking to end his 41 years as the country’s ruler.

EU finance chiefs settled yesterday on how to enable a permanent rescue fund to lend 500 billion euros ($712 billion) as of 2013, while remaining divided over how to get the current stopgap fund to its full capacity. The yield on the Irish two- year note surged 88 basis points to 10.13 percent as of 1:41 p.m. in London, after reaching 10.18 percent, the most since 2003, when Bloomberg began collecting the data.

Global markets are signaling that sustained economic growth will more than make up for Japan’s worst disaster since World War II, rising commodity prices and uprisings throughout the Middle East and North Africa. Interest-rate derivatives, bond sales by the riskiest borrowers and rebounding benchmark stock indexes all show increasing confidence in the economy.

‘Black Swan’

Markets have consistently rallied amid those shocks, called black swan events by Nassim Nicholas Taleb, the New York University professor and principal at Universa Investments LP. Taleb’s 2007 bestselling book, “The Black Swan,” showed history is full of events that can’t be predicted by trends. The term refers to the belief that only white swans existed -- until black ones were discovered in Australia in 1697.

“People are trying to balance the global growth with these exogenous economic shocks,” said Charles Burge, the Louisville, Kentucky-based head of investment-grade money management at Invesco Ltd., which oversees $641 billion. “People are thinking growth is the one that’s ultimately going to win and we can move past these one-off incidents.”

This year markets have contended with the ouster of Egyptian President Hosni Mubarak, battles between forces loyal to Libyan leader Muammar Qaddafi and rebels, protests in Saudi Arabia, Bahrain and Yemen, oil above $100 a barrel, record-high food costs and a magnitude 9.0 earthquake in Japan that killed more than 8,000 people and crippled a nuclear power plant.
Walgreen Slumps

Walgreen slumped 7.2 percent to $38.96. Gross margin, or the percentage of sales left after the cost of goods sold, was little changed at 28.8 percent, Walgreen said. Analysts at Barclays Capital and Citigroup expected gross margin would widen at the chain, which operates about 7,700 locations across the U.S. and filled one in five retail prescriptions last quarter.

Carnival fell 2.5 percent to $39.98. The world’s biggest cruise-line operator said it will have fiscal second-quarter profit of 20 cents to 24 cents a share Analysts surveyed by Bloomberg had estimated 33 cents on average.

Sprint rallied 2.9 percent to $4.49. The third-largest U.S. mobile-phone carrier was raised to “strong buy” from “outperform” at Raymond James.

Netflix gained 3.2 percent to $219.57. The mail-order and online movie-rental service was raised to “outperform” from “neutral” at Credit Suisse. The share-price estimate is $280.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net