U.S. Stocks Pare Early Losses for 9th Day Amid Sales Data

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U.S. Stocks Pare Early Losses for 9th Day Amid Sales Data

<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 14, 2013 12:17 AM GMT+0800</cite>
U.S. stocks pared morning losses, repeating a pattern that has held for nine consecutive days, as data on retail sales reinforced signals the economy is expanding moderately.

D.R. Horton Inc. and PulteGroup Inc. dropped more than 1.5 percent as homebuilders slid amid rising interest rates. U.S. Airways Group Inc. sank 10 percent after the Justice Department recommended blocking a planned merger with American Airlines. Yum! Brands Inc. slid 3.2 percent after its sales in China fell last month. Hewlett-Packard Co. rose 2.4 percent after being added to Citigroup Inc.’s focus list.

The Standard & Poor’s 500 Index lost 0.1 percent to 1,688.04 at 12:16 p.m. in New York. The Dow Jones Industrial Average fell 17.97 points, or 0.1 percent, to 15,401.71. Trading in S&P 500 stocks was 13 percent below the 30-day average during this time of day.

“The signs seem to be it’s getting better, but not strongly better,” Bill Schultz, chief investment officer who oversees about $1.1 billion at McQueen Ball & Associates in Bethlehem, Pennsylvania, said by phone. “We probably need another leg to build on to before this market can get higher. We need evidence of that and this retail sales number doesn’t give you that feeling that things really turned robustly higher.”

The S&P 500 trimmed earlier losses of as much as 0.4 percent, continuing a nine-day trend where it reached its lowest point before noon, data compiled by Bloomberg show. The gauge has rallied an average of 0.45 percent from its morning low to the close during the steak.

The index fell 0.1 yesterday, its fifth drop in the past six days after closing at a record on Aug. 2, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens. Fed officials have been scrutinizing data to determine whether growth is strong enough to curtail stimulus.

Retail Sales

Data today showed retail sales rose 0.2 percent in July, following a 0.6 percent gain in June that was larger than previously reported, according to Commerce Department figures. The median forecast of 81 economists surveyed by Bloomberg called for a 0.3 percent advance.

“It’s a market that appears to have entered into a soft phase,” Alan Gayle, senior strategist at RidgeWorth Capital Management, said by phone from Atlanta. His firm oversees about $48 billion. “The market just wasn’t inspired by the retail sales report. I would call it a solid though not inspiring report. Maybe this is a market that won’t move higher unless it gets a turbocharged dose of stronger economic news.”

Fed Bank of Atlanta President Dennis Lockhart will give a speech at 12:45 p.m. on the outlook for the U.S. economy. Lockhart said in an interview with Market News International on Aug. 7 that the Fed may reduce its bond purchases as early as September.

In Europe, shares rose after an index of German investor and analyst expectations rose more than estimated in August. Germany is Europe’s largest economy.

Earnings Scorecard

The Chicago Board Options Exchange Volatility Index, or VIX, fell 0.6 percent to 12.73 today. The equity volatility gauge reached its highest level this year in June and has since dropped 38 percent. Half of 10 S&P 500 main industries fell as telephone and utility companies sank the most, erasing more than 0.6 percent. Industrial and raw-materials performed the best, rising at least 0.2 percent.

Better-than-estimated corporate earnings have also helped U.S. 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 benchmark index that have reported quarterly results this period, 72 percent have exceeded analysts’ profit estimates, data compiled by Bloomberg show.

An S&P gauge of homebuilder stocks lost 2.3 percent to the lowest level since December as benchmark 10-year yields climbed to the highest level in a week, spurring concern rising interest rates will hinder a housing recovery. All the index’s 11 members declined. D.R Horton fell 1.5 percent to $18.53 for a seventh day of losses and Pulte slid 2.9 percent to $15.27.

Blocking Deals

US Airways plunged 10 percent to $17.03. American Airlines’ merger with the company should be blocked, the U.S. Justice Department said in a lawsuit filed today. The move will upend American’s plans to exit bankruptcy through a deal that would create the world’s biggest airline.

Yum lost 3.2 percent to $72.07. The owner of the KFC and Pizza Hut chains said same-store sales in China declined 13 percent last month because people remained reluctant to eat chicken following an outbreak of avian flu.

Orbitz Worldwide Inc. fell 13 percent to $10.26. The Internet travel services provider said PAR Capital Management has sold 8.1 million Orbitz shares, or 33 percent of its holding. PAR aims to “better diversify its portfolio,” Paul Reeder, President of PAR Capital Management, said.

Hewlett-Packard

Hewlett-Packard gained 2.4 percent, the most in the Dow, to $27.41. The largest personal computer maker may report quarterly earnings that beat expectations when announcing results on Aug. 21, according to Jim Suva, an analyst with Citigroup.

Apple Inc. added 1.2 percent to $473.13. The company will unveil a new iPhone at a Sept. 10 event, according to a person familiar with its plans. New iPads, including one with a thinner body and a mini version with a high-resolution screen will go on sale later, two people said.

Eli Lilly & Co. gained 2.9 percent to $55.63. The pharmaceutical company said a study found a drug it is developing is tied to increased survival of patients with a type of lung cancer. Lilly expects to submit applications for necitumumab to regulators before the end of 2014.

Marvell Technology Group Ltd. climbed gained 4.6 percent to $13.30. RBC Capital Markets raised its recommendation on the maker of chips for smartphones and computers to top pick from outperform.

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]