U.S. stocks decline as investors await Federal Reserve decision

‘In Line’

“We see the timing as ripe,” Sacconaghi said. “Apple’s initiation of a dividend brings the company in line with all other Dow components. We note that Apple is currently the only company above $215 billion in market cap that pays a dividend and is not included in the Dow.”

The Cupertino, California-based company is preparing to introduce the next version of the iPhone on Sept. 12 in what will be a design overhaul of its top-selling product, according to two people with knowledge of the company’s plans.

Cummins Inc. jumped 7.5 percent to $97.25. The maker of truck engines reported second-quarter earnings excluding some items of $2.45 a share, beating the average analyst estimate in a Bloomberg survey of $2.28 a share.

U.S. Steel Corp. rallied 9.9 percent to $20.80. The country’s largest producer of the metal reported second-quarter earnings that beat analysts’ estimates after demand rose for tubular products.

Pfizer’s Results

Pfizer Inc. climbed 3 percent to $24.41. The world’s largest drugmaker said it will file in mid-August to sell as much as 20 percent of its animal-health unit in an initial public offering. The company also reported profit that beat analyst estimates as a result of cost cutting.

Valero Energy Corp. jumped 5.9 percent to $27.61. The largest U.S. refiner by processing capacity said second-quarter profit rose as access to cheaper crude produced in the U.S. led to a rally in the margin between oil costs and fuel prices. Valero plans to separate its retail business to “unlock value” for its shareholders.

Goodyear Tire & Rubber Co. rose 7.4 percent to $11.14. The largest U.S. tiremaker reported a second-quarter profit that beat analysts’ estimates and lowered its full-year forecast for tire sales for the second time this year.

AmerisourceBergen Corp. climbed 3.8 percent to $40. The third-biggest U.S. drug distributor won an $18.5 billion contract to supply Express Scripts Holding Co.

Short Interest

The gain in U.S. stocks since June has coincided with a drop in short interest and a weakening measure of market breadth, a combination that suggests the rally may not last, according to Bank of America Corp.

Short interest, or the total number of shares borrowed and sold by investors betting on declines, fell 3.9 percent from a nine-month high of 19.7 billion in June through July 13, according to twice-monthly data compiled by Bloomberg from the New York Stock Exchange and the Nasdaq Stock Market.

While the S&P 500 has jumped 8.4 percent since its June 1 low, fewer companies are participating in the rally. The cumulative advance-decline line for S&P 500 stocks, which represents the number of daily gains minus the number of declines, peaked on July 3. The benchmark index for American equities is up 0.8 percent from that date.

“The recent rally was more short covering than new demand,” Mary Ann Bartels, a New York-based technical analyst with Bank of America, wrote in a note yesterday. “The technical indicators confirm this with negative divergences in price momentum and market breadth. If these indicators do not shift more positively, a potential correction into September is still on the table.”

Bloomberg News

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