Week of January 9th 2012

U.S. stocks fell, following last week’s advance in the Standard & Poor’s 500 Index, as leaders discussed shoring up the euro and investors awaited the start of the fourth-quarter earnings season.

Seven out of 10 groups in the S&P 500 fell as phone and technology companies had the biggest declines. Costco Wholesale Corp. (COST) lost 2.6 percent after Sanford C. Bernstein & Co. cut its rating for the warehouse-club chain. Alcoa Inc. (AA) rose 2.6 percent as it becomes the first company in the Dow Jones Industrial Average to report quarterly results after the market close. The S&P 500 fell 0.2 percent to 1,275.71 at 11:24 a.m. New York time, after rallying 1.6 percent last week. The Dow dropped 19.60 points, or 0.2 percent, to 12,340.32.

“There’s going to be a lot of volatility,” said Kevin Caron, a market strategist in Florham Park, New Jersey, at Stifel Nicolaus & Co., which has more than $107 billion in client assets. “There are many questions about the structure of Europe,” he said. In the U.S., the combination of slower revenue growth and probably peaking margins is the biggest challenge. We’ll see some earnings growth this year but not a lot.’’

U.S. stocks rose last week, sending the S&P 500 to its second-best start of a year since 2006, as reports on manufacturing from America to China bolstered optimism about the economy. Equities fell on the last day of the week after growth in U.S. jobs failed to lift the S&P 500 above its October high.

German Chancellor Angela Merkel and French President Nicolas Sarkozy sought to craft a plan for rescuing the euro over the next three months. Euro-area leaders may complete their new budget rulebook by Jan. 30, one month ahead of schedule, and are considering accelerating capital contributions to the bailout fund being set up this year to stem the debt crisis.

S&P 500 companies, which beat (SPX) analysts’ estimates in the previous 11 quarters, are forecast to report a 6 percent increase in per-share profit during the September-December period, according to projections compiled by Bloomberg. That would mark the slowest growth since the third quarter of 2009.