Stocks slump after two-day rally

NEW YORK — Stocks retreated on Wednesday and gave back some of their gains from a day earlier, when the Standard & Poor’s 500 index had one of its best days of the year.

Advertising companies and retailers had some of the steepest drops on worries about their earnings, while prices for Treasury bonds and gold rose modestly as investors sought safer ground. It’s the latest move lower for a stock market that’s yo-yoed since setting a record high earlier this month.

The Standard & Poor’s 500 index fell 8.47 points, or 0.3 percent, to 2,444.04, relinquishing about a third of its big gain from Tuesday. The loss snapped a two-day winning streak.

The Dow Jones industrial average fell 87.80 points, or 0.4 percent, to 21,812.09, and the Nasdaq composite lost 19.07, or 0.3 percent, to 6,278.41. The Russell 2000 index of small-cap stocks fell 1.80, or 0.1 percent, to 1,369.74.

Advertising companies had the biggest losses in the S&P 500 after an industry giant cut its forecast for revenue this year. WPP warned that its clients are feeling pressure to control their spending, and its shares fell 10.9 percent in London. In the U.S., shares of Omnicom Group fell $5.47, or 7 percent to $72.66, and Interpublic Group lost $1.32, or 6.3 percent, to $19.58.

Lowe’s, the home- improvement retailer, also dragged down the S&P 500 after it reported profit and revenue for the latest quarter that were weaker than analysts expected. It gave a profit outlook for the year that fell short of Wall Street’s forecast, and its stock fell $2.81, or 3.7 percent, to $73.01. A report showing that sales of new homes were weaker in July than economists expected didn’t help.

Worries about politics were a big reason for the market’s stumbles in recent weeks. In Washington, the concern is about whether the government can push through tax cuts and other pro-business policies. Now, the market seems to have little to no expectation for much help coming from Washington, said Katie Nixon, chief investment officer at Northern Trust Wealth Management.

“Actions speak louder than words, and when we see actual action, you’ll see markets sit up and take notice,” she said. “But so far it’s been a rhetorical exercise.”

She said she noticed chief executives talking a lot about their hopes for tax reform or infrastructure spending earlier this year, when companies were reporting their results for the January through-March quarter. But in conference calls the past few weeks, as CEOs reported their results for the spring quarter, Nixon heard much less of such talk.

The government is coming close to some crucial deadlines, including one to increase its borrowing authority in order to avoid a default on its debt and another to prevent a government shutdown.

Prices for Treasurys rose, which in turn pushed down yields. The 10-year Treasury yield fell to 2.16 percent from 2.21 percent late Tuesday. The two-year yield dipped to 1.31 percent from 1.33 percent, and the 30-year yield dropped to 2.75 percent from 2.79 percent.

Benchmark U.S. crude oil rose 58 cents to settle at $48.41 per barrel. Brent crude, the international standard, rose 70 cents to $52.57 per barrel.