Stocks extend January slide, hit by weak earnings, emerging markets turmoil

Bloomberg News

U.S. stocks fell, sending the Standard & Poor’s 500 Index to its worst January since 2010, as earnings reports at Amazon.com Inc. and Mattel Inc. disappointed investors and turmoil in emerging markets continued.

Amazon slumped 11% after the world’s largest Web retailer reported profit and sales that trailed analysts’ estimates. Mattel Inc. sank 12% after a drop in Barbie sales weighed on results. Google Inc. jumped 4%, pacing gains in technology shares, after sales topped estimates on growing advertising spending during the holiday season.

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The S&P 500 retreated 0.7% to 1,782.43. The index fell 0.4% over the past five days for a third week of losses, the longest streak since May 2012. The Dow Jones Industrial Average dropped 149.76 points, or 0.9%, to 15,698.85, the lowest in almost three months. About 7.8 billion shares changed hands on U.S. exchanges Friday, 25% above the three-month average.

“It seems investors can expect increased volatility and more modest returns as the year unfolds,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, said. He helps oversee $112 billion. “We need earnings to drive the market to meaningfully higher levels and to do that you need an improving economy. We’ll get a better read on that over the next week.”

The S&P 500 fell as much as much as 1.2% Friday to 1,772.26, approaching its lowest level since Dec. 18.

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“The bulls are defending their turf,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said. “When you see those December lows start to hold tough, that’s the bulls starting to sink their teeth in and defend.”

The S&P 500 fell 3.6% in January, its first monthly decline since August, as emerging-market currencies slumped amid signs China’s economy is slowing. While the benchmark has retreated in January 24 times since 1950, the gauge ended the year lower than its Jan. 31 reading in only 11 of those years, according to data compiled by MKM Partners. A lower start to the year resulted in a full-year decline for the index 58% of the time.

The S&P 500 last fell to start the year in 2010, when the gauge rallied 17% in the next 11 months to finish the year with a 13% gain.

A report Friday showed consumer spending climbed more than forecast in December even as incomes stagnated. Household purchases, which account for about 70% of the U.S.