The benchmark measure of U.S. shares slumped 1.2 percent to 1,317.47 at 9:40 a.m. in New York.

Analysts have raised forecasts for S&P 500 earnings during the next 12 months each month this year, according to average projections compiled by Bloomberg. They expect companies in the benchmark gauge to earn $104.73 a share, up from $96.92 forecast at the beginning of January, the data show. The four-week increase on May 2 represented the biggest gain since May 2010, data compiled by Bloomberg show.

Equity Valuations

Global per-share earnings will rise 18 percent in 2011, Citigroup Inc. said May 18, boosting a previous prediction of 12 percent growth. Earnings are estimated to increase 11 percent in 2012 and 9 percent in 2013, analysts led by Robert Buckland, Citigroup's chief global strategist, wrote. A total of 328 of 454 companies in the S&P 500 that reported earnings since April 11 exceeded estimates, according to data compiled by Bloomberg.

Rising income has held down valuations in the S&P 500 as it rallied 30 percent from last year's low of 1,022.58 on July 2. The index traded at 14.9 times profit since then, on average, compared with a mean price-earnings ratio of 16.4 since over the past 57 years, data compiled by Bloomberg show.

"You'll have a couple of months when people can convince themselves that anything will happen," said Shaoul, the New York-based chairman of Marketfield, who oversees $1 billion and beat 99 percent of his peers last year. "People will start to worry about the U.S. economy. In the end, corporate earnings will tell them they needn't worry."

Marketfield owns shares of Memphis, Tennessee-based FedEx Corp., operator of the world's biggest cargo airline, network- gear maker Ciena Corp. in Linthicum, Maryland, and Omaha, Nebraska-based Union Pacific Corp., the largest U.S. railroad by sales, according to a March 31 filing.

Economic Reports

Government reports on the economy are failing to match economist projections. The Citigroup Economic Surprise Index, which tracks how much data has varied from predictions in Bloomberg surveys, has sunk to minus 49.1, meaning reports are missing projections by the most since August. The measure, which starts in 2003, reached a record high of 97.5 in March.

A gauge of stocks whose gains or losses have exceeded the market's return shows companies that led last year's rally are trailing in 2011. The S&P 500 High Beta Index of 100 stocks such as Advanced Micro Devices Inc. and Massey Energy Co. has dropped 4.9 percent in May and has lagged behind the broader measure for three months, the longest stretch since November 2008. The S&P 500 has dropped 2.2 percent since April 29.