Concern Europe’s debt crisis is reviving has sent American equities to their biggest single-day decline in 2013. The S&P 500 slumped 1.8 percent on Feb. 25 after Italian elections produced inconclusive results. It dropped 0.6 percent on March 18 after European leaders imposed a tax on Cyprus bank deposits as part of a bailout agreement.

Spreads between stocks and price projections have narrowed as analysts cut forecasts for S&P 500 earnings. They predict profits among companies in the benchmark gauge will fall 1.8 percent in the first quarter from a year earlier, compared with estimates for a 1.2 percent gain at the start of the year. Five companies issued earnings forecasts below analyst estimates last month for each that predicted results above the average projection, data compiled by Bloomberg show.

Earnings Estimates

“The fundamentals are not necessarily dramatically better and therefore you may be paying a pretty full price” for stocks, Bruce McCain, who helps oversee more than $20 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a March 27 phone interview. “The analysts have less to go on.”

Shares have surged 132 percent since March 9, 2009, the biggest bull market since the eight-year advance in which the benchmark index added 302 percent through 1998. They have skirted bear markets twice, falling 16 percent over two months in 2010 and 19 percent between May and October of 2011.

“A lot of people felt like we were going to muddle through the first half, so when they set their targets, that’s what they had in mind,” Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital Associates LLC in Greenwood, South Carolina, said in a March 28 telephone interview. “The consequence of that is we’re getting to these targets set for the year much quicker.”

Dow Record

The spread between analyst forecasts and stock prices is less than half what it was when the S&P 500 last peaked in October 2007. Average estimates for individual equities implied gains of 12 percent at the time, data compiled by Bloomberg show.

The Dow Jones Industrial Average exceeded its record on March 5, erasing losses from the financial crisis, and has advanced 2.3 percent since then on signs the U.S. housing and job markets are recovering. Home prices increased the most since June 2006 in January, a report last month showed. First-time jobless claims unexpectedly fell the week ended March 9.

“The move we’ve had so far does not mean it cannot continue,” Warren Koontz, head of U.S. large-cap value stocks at Loomis Sayles & Co. in Boston, said in a March 26 phone interview. His firm manages about $185 billion. “When we see this dislocation between a near-term analyst opinion and what we believe is longer-term and better potential that’s already being reflected in the price, we look at that as an opportunity.”