U.S. Stocks Fluctuate After Housing Data as Fed Meets
<cite class="byline" style="margin: 0px; padding: 0px; border: 0px; outline: 0px; font-size: 11px; vertical-align: baseline; background-color: transparent; width: 640px; color: rgb(111, 111, 111); display: block; font-style: normal; line-height: 1.3em; position: static !important; background-position: initial initial; background-repeat: initial initial;">By Jonathan Morgan & Nikolaj Gammeltoft - Aug 23, 2013 10:23 PM GMT+0800</cite>
U.S. stocks fell, following the Standard & Poor’s 500 Index’s biggest gain in three weeks, as a report showed new-home sales plunged in July and investors watched Federal Reserve officials for signals on stimulus cuts.
PulteGroup Inc. sank 4 percent to pace declines in an index of homebuilder stocks. Pandora Media Inc. slumped 13 percent as its sales forecast fell short of estimates. Microsoft Inc. rallied 7.4 percent after Chief Executive Officer Steve Ballmer said he would retire within 12 months. Nasdaq OMX Group Inc. rose 1.1 percent after the shares slid the most in more than four months following a trading disruption yesterday.
The S&P 500 (SPX) rose less than 0.1 percent to 1,657.39 at 10:22 a.m. in New York. The Dow Jones Industrial Average lost 14.56 points, or 0.1 percent, to 14,949.18. Trading in S&P 500stocks was 8.2 percent higher than the 30-day average at this time of day.
“We’ve gone into a quiet period with regards to domestic earnings, but the macro picture is very important,”Jim Russell, the senior equity strategist for U.S. Bank Wealth Management, said in an interview from Cincinnati. His firm oversees $110 billion. “Investors are trying to figure out how markets will respond to rising rates and what it will mean for the consumers and the business climate. This weekend’s meeting in Jackson Hole is a focus although we don’t expect big announcements.”
Fed Debate
The S&P 500 has gained 0.1 percent this week as investors weighed Fed minutes that showed almost all policy makers agreed with plans to reduce the pace of monthly bond purchases this fall if the economy continues to improve in line with forecasts.
Officials, most of whom are at a conference in Jackson Hole, Wyoming, today to discuss monetary policy, have been scrutinizing data to determine whether the economy is strong enough to reduce stimulus. Fed Bank of Atlanta President Dennis Lockhart told Bloomberg Television that he wouldn’t rule out a September move to start tapering as long as the economy’s performance justifies it.
Data today from the Commerce Department showed purchases of new U.S. homes plunged in July by the most in more than three years and previous months were revised down, a sign that growth in the industry may be taking a pause as mortgage rates rise. Yields on 10-year Treasury notes have risen toward a two-year high.
A report yesterday showed the fewest workers in more than five years applied for U.S. unemployment benefits over the past month. The Fed has said it plans to keep benchmarkinterest rates near zero at least as long as the unemployment rate is above 6.5 percent and inflation is no more than 2.5 percent.
Whipsaw
Speculation about the stimulus has whipsawed stocks since May, when Chairman Ben S. Bernanke, who is not at the conference, first indicated cuts could start this year. The S&P 500 tumbled 5.8 percent from a record high on May 21 through June 24. It then rebounded as much as 8.7 percent to close at its latest record of 1,709.67 on Aug. 2. The index finished yesterday 3.1 percent below the all-time high.
The monetary support helped push the S&P 500 up as much as 153 percent from its March 2009 low, as better-than-estimated corporate earnings also fueled equity gains. Of the 484 companies in the S&P 500 that have reported quarterly earnings this period, 71 percent surpassed profit estimates, Bloomberg data show. There are no companies in the gauge scheduled to report today.
‘Information Asymmetry’
Nasdaq halted trading of its listed stocks for three hours yesterday because a computer problem left some investors without quotes and the company did not want to have “information asymmetry,” Chief Executive Officer Robert Greifeld said in interviews today.
“The Nasdaq technical hangover may prompt caution among investors taking positions until there is further clarity that the error has been fully resolved,” James Butterfill, who helps oversee $44 billion as head of global equity strategy at Coutts & Co. in London, wrote in an e-mail.
Nasdaq rose 1.1 percent to $30.79 after retreating 3.4 percent yesterday. The exchange operator will probably not have to spend large sums on damages, Wells Fargo & Co. analysts led by Christopher Harris wrote in a note. Nasdaq suspended trading in the stocks, so investors probably didn’t lose money as a result of mismanaged orders.
Greifeld told CNBC that Nasdaq has “no liability” from the outage and said yesterday’s share decline was a buying opportunity.
Homebuilder Rout
The S&P Supercomposite Homebuilding Index sank 3.1 percent, with all 11 members declining. PulteGroup retreated 4 percent to $15.66 and KB Home lost 4.1 percent to $16.50.
Pandora Media slumped 13 percent to $18.87. The biggest online radio service forecast third-quarter profit that will miss analysts’ estimates as the company invests to expand its sales staff.
Microsoft rallied 7.4 percent to $34.80 for the biggest gain in the Dow. Ballmer, who has struggled to adapt to an era of declining personal-computer sales, will retire after more than a decade leading the world’s largest software maker.
Autodesk Inc. jumped 12 percent to $40.59, the biggest gain since December 2008. The software maker was upgraded to buy from neutral by B Riley & Co. after its sales and profit topped estimates in the second quarter.
To contact the reporters on this story: Jonathan Morgan in Frankfurt [email protected]; Nikolaj Gammeltoft in New York at [email protected]
To contact the editors responsible for this story: Andrew Rummer at [email protected]; Lynn Thomasson at [email protected]
