By Rita Nazareth March 11 (Bloomberg) — Most U.S. stocks fell as higher- than-estimated inflation in China spurred speculation the nation will be forced to raise interest rates while technology companies and banks rallied. Deere & Co., AK Steel Holding Corp. and Caterpillar Inc. fell more than 0.8 percent on concern that demand from China will slow, curbing the global economic recovery. Google Inc. and International Business Machines Corp. advanced more than 1 percent. Citigroup Inc. climbed following a Financial Times report that Chief Executive Officer Vikram Pandit will say the bailed-out bank may earn $20 billion within a few years. More than three companies fell for every two that rose on U.S. stock exchanges. The Standard & Poor’s 500 Index lost 0.2 percent to 1,143.78 at 12:07 p.m. in New York. The Dow Jones Industrial Average slumped 8.31 points, or 0.1 percent, to 10,559.02. “It will be slower going into risk assets,” said Dan Greenhaus , chief economic strategist at Miller Tabak & Co. in New York. “People are concerned about whether or not globally there’s a little bit of a moderation in the pace of gains that we’ve seen economically speaking..” The S&P 500 surged 69 percent through yesterday during the past year, recovering most of its losses from the decline between Jan. 19 and Feb. 8. The three-week retreat was driven by concern some European countries will fail to pay back debt and speculation the Fed will need to rein in emergency stimulus measures as the economy improves. 16-Month High China’s inflation reached a 16-month high, industrial output climbed and new loans exceeded forecasts, putting pressure on the government to cool economic growth. Consumer prices rose 2.7 percent in February from a year earlier, the National Bureau of Statistics said today, compared with the 2.5 percent median estimate of 29 economists surveyed by Bloomberg News. Production rose 20.7 percent in the first two months of 2010, the most in more than five years. Premier Wen Jiabao aims to hold full-year inflation around 3 percent after banks flooded the financial system with money to drive a rebound from the global recession. Gross domestic product grew 10.7 percent last quarter and central bank Governor Zhou Xiaochuan said March 6 that anti-crisis policies, including the yuan’s peg to the dollar, must end “sooner or later.” ‘Too Far, Too Fast’ “Obviously, inflation is a concern on a global basis,” said Tom Wirth , senior investment officer at Chemung Canal Trust Co., which manages $1.6 billion in Elmira, New York. “That fear gets translated into stock prices. China has led us out of the global recession. If they raise rates too far, too fast, that’s going to slow the world down. I don’t think it’s a problem right now, but there’s always an overreaction from investors.” U.S. stocks extended losses today after the nation’s trade deficit unexpectedly narrowed in January as demand for foreign oil and automobiles dropped. The S&P 500 then rebounded as technology stocks and banks rallied. The trade gap decreased 6.6 percent to $37.3 billion from a revised $39.9 billion in December as Americans imported the fewest barrels of crude oil in a decade, Commerce Department figures showed today in Washington. Exports decreased 0.3 percent, the first decline since April, on fewer shipments of commercial aircraft and autos. To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net .
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Most U.S. Stocks Fall on China Inflation; Banks, Technology Companies Gain
