Most U.S. stocks declined, wiping out an earlier advance, as Dell Inc. (DELL) forecast weaker sales and two Federal Reserve officials expressed concern about the amount of stimulus being applied to the economy.
Dell fell 10 percent as slower spending on PCs and consumer technology crimped its sales forecast. Abercrombie & Fitch Co. (ANF), the teen-clothing retailer, slid 8.7 percent as executives said cost pressure will rise. Standard & Poor’s 500 Index companies that are least-tied to the economy, including phone and utility providers, rose at least 0.8 percent as a group. Eastman Kodak Co. (EK) surged 26 percent as analysts and investors told Bloomberg News its patents may make it a takeover target.
About 18 stocks fell for every 17 that rose on U.S. exchanges. The S&P 500 added 0.1 percent to 1,193.89 at 4 p.m. in New York, after gaining 1.3 percent at most and dropping as much as 0.7 percent. The Dow Jones Industrial Average climbed 4.28 points, or less than 0.1 percent, to 11,410.21 today.
“People started to reevaluate the odds of a QE3,” James Paulsen, the chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $340 billion, said in a telephone interview. “There are a lot of people that have been saying we’re going to get a QE3” and comments from Fed policy makers may have reduced those odds, he said, using the nickname for a potential third round of quantitative easing.
The S&P 500 rose as much as 28 percent after Fed Chairman Ben S. Bernanke foreshadowed on Aug. 27 of last year a second- round of so-called quantitative easing. The index has fallen 12 percent from a three-year high on April 29 on concern about Europe’s debt crisis and an economic slowdown. The Fed finished its second round of asset purchases at the end of June.
Fed Speculation
Earlier gains in stocks were propelled by better-than- estimated earnings at companies including Target Corp. (TGT) and Staples Inc. (SPLS) Stocks reversed earlier gains on investors’ speculation that the Fed may not consider another economic stimulus program to avert a recession.
Bernanke’s pledge last week to keep interest rates near zero percent until mid-2013 was “inappropriate policy at an inappropriate time,” Charles Plosser, president of the Fed Bank of Philadelphia, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. Dallas President Richard Fisher said the central bank shouldn’t enact policy to protect stock investors. Both officials dissented from the Fed’s Aug. 9 statement.
Wholesale Costs
Stock-index futures maintained gains today after a report showed that wholesale costs in the U.S. rose more than forecast in July. The 0.2 percent advance in the producer prices index followed a 0.4 percent drop in June, Labor Department figures showed. Economists forecast a 0.1 increase, according to the median estimate in a Bloomberg News Survey. The so-called core measure, which excludes volatile food and energy, climbed 0.4 percent, the most since January.
The report showed the cost of crude goods dropped in July for a third consecutive month, led by declining petroleum and food prices. Slowing sales and the drop in raw-materials mean companies will be less likely to raise prices, which may give Federal Reserve policy makers more room to act to spur growth after the world’s largest economy almost stalled.
Inflation data suggest “Fed policy makers are unlikely to rush to further easing,” Michael S. Hanson, economist at Bank of America Merrill Lynch in New York, wrote in a note today. “But with the economy remaining muddled on a slow growth and high unemployment path, a dovish bias is likely to remain for now.”
Technology Shares Slump
Technology companies in the S&P 500 fell 0.9 percent, the most within 10 industries.
Dell slumped 10 percent to $14.20. Lackluster demand from consumers and market-share gains by Apple Inc. weighed on results, offsetting stronger corporate orders for server computers.
Abercrombie & Fitch declined 8.7 percent to $64.87. Pressure from increasing commodity costs will be greater in the second half, Chief Executive Officer Michael Jeffries told investors on a conference call. Earlier today, the New Albany, Ohio-based company reported that second-quarter sales rose 23 percent on U.S. back-to-school purchases and gains in Europe.
Target rose 2.4 percent to $50.55. The second-largest U.S. discount retailer posted second-quarter profit that surpassed analysts’ estimates as cost reductions helped offset sales of lower-margin goods.
Store Openings
Chief Executive Officer Gregg Steinhafel has slowed store openings during the past two years and pursued sales growth by adding grocery sections and offering discounts on items purchased with a store-issued debit or credit card. Those initiatives helped same-store sales in the quarter rise 3.9 percent, the most since 2007.
Staples added 0.5 percent to $14.29. The office-supply retailer said its second-quarter earnings minus some items were 22 cents a share, beating the average analyst estimate of 19 cents a share.
Per-share earnings increased 17 percent among the S&P 500 companies that have released quarterly results since July 11, according to data compiled by Bloomberg. About three-quarters of the companies have topped the average analyst profit forecast, the data show.
Eastman Kodak surged 26 percent to $2.69. The 131-year-old camera company may hold patents worth five times more than the business itself, making it a takeover target, investors and analysts told Bloomberg News. The digital-imaging patents owned by Kodak may now be worth $3 billion in a sale, MDB Capital Group said.
No comments:
Post a Comment