U.S. stocks fluctuate on earnings reports before employment data

IN ANTICIPATION OF the planned release Tuesday of delayed September employment data, U.S. stocks fluctuated Monday on news of corporate third-quarter earnings. / BLOOMBERG NEWS FILE PHOTO/JIN LEE
IN ANTICIPATION OF the planned release Tuesday of delayed September employment data, U.S. stocks fluctuated Monday on news of corporate third-quarter earnings. / BLOOMBERG NEWS FILE PHOTO/JIN LEE

NEW YORK – U.S. stocks swung between gains and losses, after the Standard & Poor’s 500 Index rallied to a record, as investors watched corporate earnings to assess the strength of the economy before Tuesday’s employment data.

Homebuilders slumped 3.3 percent as a group amid a report showing existing-home sales declined for the first time in three months. Halliburton Co. dropped 1.9 percent as revenue fell short of forecasts. Apple Inc. rose 2.9 percent as CEO Tim Cook will likely introduce a high-definition iPad mini and thinner iPad Tuesday. General Electric Co. gained 2.6 percent to the highest level since 2008. VF Corp. and Hasbro Inc. climbed at least 4.2 percent on better-than-estimated earnings.

The S&P 500 lost less than 0.1 percent to 1,744.26 at 12:31 p.m. in New York, after rising as much as 0.2 percent earlier. The Dow Jones Industrial Average fell 11.86 points, or 0.1 percent, to 15,387.79. Trading in S&P 500 stocks was in line with the 30-day average during this time of day.

“There are certainly some digestions going on as these earnings are being reported,” Jim King, president and chief investment officer who helps oversee about $2.4 billion at Wyomissing, Pa.-based National Penn Investors Trust Co., said by phone. “What we know is that earnings are continuing to come through pretty strongly and the Fed continues to promote asset growth. Those two things are the drivers of seeing higher stock prices over the next several quarters.”

- Advertisement -

The S&P 500 had its best weekly gain since July last week as results from Google Inc. topped estimates and speculation grew that the Federal Reserve will delay cutting monetary stimulus. The index has gained 3.7 percent so far in October as Congress agreed on a new federal budget that avoided a default and ended the first partial government shutdown in 17 years.

New highs

The benchmark measure has advanced 22 percent this year as Fed Chairman Ben S. Bernanke refrained from reducing $85 billion of monthly bond purchases to stimulate the economy.

“The fact that we reached new highs is bullish,” Tom Wirth, a senior investment officer for Chemung Canal Trust Co., in Elmira, N.Y., said in a telephone interview. His firm manages $1.7 billion. “The trend is up and you don’t want to fight that. A lot of the attitude is recognition that quantitative easing is not going to stop any time soon and that’s positive for equities.”

The Labor Department will release on Tuesday the September jobs report, which was delayed from its original Oct. 4 date because of the 16-day partial federal shutdown that ended Oct. 17. The data will probably show employers added 180,000 workers in September, the most since April, after a 169,000 gain in August, according to the median estimate of 93 economists surveyed by Bloomberg.

Investment flow

Money has been flowing in and out of financial markets more rapidly than ever before this year, a bullish signal as the threat of a U.S. sovereign default fades.

Since Sept. 1, about $47 billion has gone to exchange- traded funds that track everything from stocks to bonds to commodities, according to data compiled by Bloomberg. That followed $18 billion pulled in August, $40 billion added in July and $11 billion pulled in June, making it the most volatile period on record for flows. Almost $7 billion went to ETFs on Oct. 17 alone.

Analysts have raised their forecasts for profits and now forecast an average increase of 2.5 percent for all companies in the S&P 500, according to estimates compiled by Bloomberg. That compares with an expected gain of 1.7 percent at the beginning of the month.

Earnings at the 106 companies that have reported so far grew 4.5 percent, while sales gained 2 percent. Some 71 percent of the companies have topped analysts’ profit estimates, while 54 percent have beaten on sales.

Volatility gauge

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, climbed 2.6 percent Monday to 13.38, following three days of declines. The measure has fallen 19 percent this month.

Six out of 10 S&P 500 main industries retreated as health- care and consumer-staples shares fell more than 0.4 percent for the worst performance. Telephone and technology stocks rose at least 0.6 percent.

An S&P index of homebuilders slipped 3.3 percent as all its 11 members dropped. Purchases of previously owned homes fell 1.9 percent to a 5.29 million annual rate in September, retreating from an almost four-year high as rising prices and mortgage rates discouraged would-be buyers, a report from the National Association of Realtors showed.

D.R. Horton Inc. declined 3.3 percent to $18.40 while Lennar Corp. lost 3.1 percent to $33.96.

Revenue miss

Halliburton slid 1.9 percent to $51.49. The world’s largest provider of hydraulic-fracturing services reported third-quarter revenue that missed forecasts. Excluding one-time items, earnings beat analysts’ estimates.

Gannett Co. declined 6 percent to $25.84. The publisher of USA Today and owner of U.S. television stations reported third-quarter sales that trailed analysts’ estimates. Television advertising revenue in the fourth quarter will decline in a percentage of “high teens,” the company said.

Apple climbed 2.9 percent to $523.53. The company is upgrading its iPad lineup to fend off a growing list of competitors, which are introducing their own tablets at lower prices with snazzier features. Cook, facing two straight quarters of declining profit and a stock that’s down by more than a quarter from a September 2012 record, will introduce the new models at a San Francisco event Tuesday, people with knowledge of the plans have said.

Focus list

GE rallied 2.6 percent to $26.21, the highest level since September 2008. The company has climbed 8.4 percent over four days, the biggest gain for that time span since December 2011. The maker of jet engines, power generation equipment and locomotives was added to Citigroup’s U.S. focus list. The company last week assured investors that its industrial business is poised to meet a goal for profit-margin growth.

VF gained 4.2 percent to $212.88. The world’s largest apparel maker increased its quarterly dividend to $1.05 a share from 87 cents as profit exceeded analysts’ estimates. The company announced a 4-for-1 stock split.

Hasbro jumped 6 percent to $50.09, poised for a record close. The world’s second-biggest toymaker reported third- quarter earnings and sales that topped analysts’ estimates.

AT&T Inc., the largest U.S. phone company, advanced 1.3 percent to $35.05. The company announced Sunday it has agreed to sell or lease 9,700 wireless towers with Crown Castle International Corp. for $4.85 billion, giving it extra cash as it considers a European expansion. The agreement makes AT&T the latest carrier to offload towers to independent operators.

No posts to display