U.S. stocks were little changed, following the biggest drop in three weeks for the Standard & Poor’s 500 Index, as concern that European debt-crisis talks were stalling offset better-than-forecast economic reports.
Citigroup Inc. and Morgan Stanley lost at least 0.1 percent, reversing earlier rallies. Amazon.com Inc., the world’s largest Internet retailer, tumbled 12 percent after its profit plunged as it ramped up spending on new products. Boeing Co. climbed 3.6 percent as earnings topped analysts’ estimates.
The S&P 500 fell 0.2 percent to 1,226.86 at 11:15 a.m. New York time, after climbing as much as 1.2 percent. The benchmark gauge for U.S. equities dropped 2 percent yesterday. The Dow Jones Industrial Average climbed 28.31 points, or 0.2 percent, to 11,734.93 today.
“We’re at a key juncture here,” Barry Knapp, the New York-based head of U.S. equity strategy at Barclays Plc, said in a telephone interview. “The growth outlook is improving. That holds the key as to capital markets’ ability to be able to absorb any of these continuous overpromising and underdelivering coming out of Europe. Expectations are just so low that any hint that they are making progress will push stocks higher.”
The S&P 500 rose from the threshold of a bear market early in October on steps by European leaders to support banks and higher-than-estimated corporate earnings. The benchmark gauge for American equities has rallied 8.6 percent in October through yesterday, following a five-month decline.
Leveraging Options
Stocks erased gains as a European Union official said EU leaders may ask national finance ministers to determine the capacity of the expanded European Financial Stability Facility by the end of November. The leaders meet in Brussels later today and will back two EFSF leveraging options set out last week, the official said on condition of anonymity because the meeting hasn’t taken place yet.
Global stocks rallied earlier after Germany’s lower house of parliament approved a plan to increase the capacity of the European bailout fund. European leaders hold the 14th crisis summit in 21 months today to discuss the Greek bailout, shoring up banks and strengthening the 440 billion-euro ($613 billion) rescue fund.
“Today is a big day for Europe and, quite possibly, a defining day for U.S. share price performance,” Myles Zyblock, chief institutional strategist at RBC Capital Markets, wrote today in a note to clients. “A concrete and credible solution out of Europe is likely to encourage another wave of short covering which could propel the market higher. Further delay will only add to the overall costs of a fix, while outright disappointment is likely to be met by share price weakness.”
Economic Data
Stock futures extended gains as orders for U.S. durable goods excluding transportation equipment rose in September by the most in six months. A separate report showed purchases of new houses increased more than forecast in September as discounted prices lured buyers in some parts of the country.
Today, 52 companies in the S&P 500 are scheduled to report quarterly results. Profit for all companies in the index climbed 16 percent during the third quarter, and will increase 18 percent to a record $99.38 a share for all of 2011, according to analyst estimates compiled by Bloomberg.
Boeing gained 3.6 percent to $66.01. The company reported third-quarter earnings excluding some items of $1.46 a share. On average, the analysts surveyed by Bloomberg estimated profit of $1.10 a share.
Amazon Tumbles
Amazon.com tumbled 12 percent to $200.93. The company is sacrificing profit margins in search of sales volume and market- share gains. Amazon will sell its Kindle Fire tablet for as low as $199, less than half the price of Apple Inc.’s cheapest iPad.
Ford Motor Co. dropped 5.8 percent to $11.71. The company said its automotive operating profit margin may fall this year to 5.7 percent from 6.1 percent last year and 6.5 percent in the first nine months of the year, primarily because of a loss on commodity hedges.
MetLife Inc. slumped 2.4 percent to $32.03. The largest U.S. life insurer said its plan to increase the dividend and resume share repurchases was rejected by the Federal Reserve. “We are disappointed that we cannot commence increased capital actions now,” Chief Executive Officer Steven Kandarian said in a statement yesterday.
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