U.S. Stocks Fluctuate After Weekly Decline Amid Japan GDP
<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 Lu Wang & Nick Taborek - Aug 13, 2013 12:58 AM GMT+0800</cite>
U.S. stocks fluctuated, after the worst weekly loss since June for the Standard & Poor’s 500 Index, as data showed a slowdown in Japan’s economic growth and investors awaited tomorrow’s report on America’s retail sales.
Chevron Corp. dropped 1.2 percent as oil fluctuated after falling five times in six days. Tesla Motors Inc. fell 4 percent as Lazard Capital Markets LLC downgraded the carmaker’s shares. Apple Inc. advanced 2.4 percent after winning a patent-infringement battle against Samsung Electronics Co. BlackBerry Ltd. jumped 5.1 percent after the company’s board said it is exploring alternatives, including a possible sale.
The S&P 500 fell 0.2 percent to 1,688.65 at 12:57 p.m. in New York. The Dow Jones Industrial Average declined 16.18 points, or 0.1 percent, to 15,409.33. Trading in S&P 500 stocks was 19 percent below the 30-day average at this time of day.
“We have growth frustratingly low offset by discount rates that are unnaturally low,” Joe Costigan, director of equity research at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. His firm oversees $6.7 billion. “As long as that’s the case, the market will stay locked at least into September and you’ll see days like this with low volume and really not a lot of conviction.”
The S&P 500 declined 1.1 percent last week, its biggest drop in seven weeks, and the Dow dropped 1.5 percent in the previous five days, snapping a string of six weekly advances, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens.
Rising Valuation
The S&P 500 has rallied 18 percent so far in 2013 and closed at a record 1,709.67 on Aug. 2. The index is trading at 15.3 times projected earnings, up from 13.1 times on the first trading day of this year. That compares with a five-year average of 13.9 times, data compiled by Bloomberg show.
Better-than-estimated corporate earnings and central bank stimulus, including record-low borrowing rates, have helped equities rally, with the S&P 500 surging more than 150 percent from its bear-market low in 2009.
Of the 450 companies in the S&P 500 to have reported quarterly results this period, 72 percent have exceeded analysts’ profit estimates, with earnings rising 2.8 percent, data compiled by Bloomberg show.
“We’re seen a rally with a multiple expansion and not necessarily earnings growth,” Jeff Schwarte, a money manager who helps oversee about $290 billion in Des Moines, Iowa, at Principal Global Investors, said by phone. “We need to see earnings, we need to see some resolution on tapering.”
Economic Reports
Investors have been scrutinizing economic data to determine whether growth is strong enough for the Fed to curtail its monthly bond buying. A Commerce Department report tomorrow will show that retail sales rose for a fourth consecutive month in July, economists surveyed by Bloomberg predicted. A Fed release on Aug. 15 may show factories, mines and utilities increased their output in July. On Aug. 16, reports will probably show that housing starts and building permits rebounded last month.
In Asia, government reports showed Japan’s gross domestic product growth slowed from the first quarter to a pace below economists’ forecasts while Chinese factor production increased a higher-than-expected 9.7 percent in July.
The Chicago Board Options Exchange Volatility Index, or VIX, retreated 2.5 percent to 13.08. The equity volatility gauge reached its 2013 peak in June and has since dropped 36 percent.
Chevron, JPMorgan
Seven of 10 main groups in the S&P 500 fell today, with energy and utility stocks sinking 0.7 percent. Chevron slid 1.2 percent to $121.08 and Exxon Mobil Corp. dropped 0.9 percent to $89.91. Oil fluctuated after erasing a 0.9 percent drop on the Japanese GDP report.
JPMorgan Chase & Co. fell 0.8 percent to $54.07, the stock’s seventh straight decline. Prosecutors are weighing penalties for the bank, including a fine and a reprimand, related to allegations staff tried to conceal losses last year, the New York Times reported. The U.S. may announce charges as early as this week against former London-based employees, a person familiar with the matter said.
Tesla slid 4 percent to $146.87. Investors are pricing in the company’s development into a successful premium manufacturer similar to Porsche Automobil Holding SE over the next decade, and any “execution issues” with its electric car models could send the shares down to $100, Aditya Satghare, an analyst with Lazard, wrote in a note to clients.
Sysco, Apple
Sysco Corp. fell 4.7 percent to $33.38. The food distributor reported fourth-quarter results that missed analysts’ estimates as weak restaurant traffic hurt profit.
Apple advanced 2.4 percent to $465.53, on track to snap a four-day losing streak. The U.S. International Trade Commission on Aug. 9 said Samsung Electronics Co. infringed two Apple patents and issued an order banning imports of products using the iPhone maker’s multitouch features and headphone jack detection.
F5 Networks Inc. gained 3.6 percent to $93.15 for the second-biggest gain in the S&P 500. Barclays Plc analyst Ben Reitzes upgraded the Internet software provider to overweight from equalweight, citing improved prospects in the company’s networking business and “significant” opportunities to provide security solutions.
BlackBerry added 6.2 percent to $10.37, the highest since July 1. The mobile device maker said it has formed a special committee to explore options including a sale of the company or a joint venture. Its shares slumped 18 percent this year through yesterday.
Newmont Mining Corp., the world’s second-biggest gold producer, gained 5.6 percent to $31.16 for the largest increase in the S&P 500, as the precious metal rose the most in three weeks. Barrick Gold Corp, Newmont Mining’s bigger rival, added 5.4 percent to $18.36.
To contact the reporters on this story: Lu Wang in New York at [email protected]; Nick Taborek in New York at [email protected]
To contact the editor responsible for this story: Lynn Thomasson [email protected]
