U.S. stocks were little changed, with benchmark indexes trading near seven-week lows, as Americans signed fewer contracts than forecast to purchase previously owned homes and investors monitored earnings.
A measure of homebuilders in S&P indexes declined 2 percent. Cliffs Natural Resources Inc. plunged 10 percent as the largest U.S. iron-ore producer reported third-quarter results that missed analysts’ estimates. Procter & Gamble Co., the world’s largest consumer-products maker, rallied 2.8 percent after reporting profit that topped analysts’ projections.
The Standard & Poor’s 500 Index rose 0.1 percent to 1,410.20 at 3:22 p.m. New York time, trimming an earlier rally of 0.9 percent. The Dow Jones Industrial Average lost 4.48 points, or less than 0.1 percent, to 13,072.86. Trading in S&P 500 companies was 3 percent higher than the 30-day average at this time of day.
“The market is trying to digest a lot of reports,” said Walter Todd, who oversees about $940 million as chief investment officer of Greenwood Capital in Greenwood “For this earnings season, while expectations were fairly low, certain names are turning out to be worse than expected.”
Equities reversed earlier gains as seven out of 10 groups in the S&P 500 retreated. Fifty-four companies in the S&P 500 are scheduled to release results today. Earnings at about 71 percent of the index’s companies beat analysts’ estimates, according to data compiled by Bloomberg. Third-quarter sales missed forecasts at 61 percent of companies, the data showed.
Economic Data
Orders for U.S. business equipment stalled in September, capping a quarterly slump that signals investment will cool in the second half of the year. Fewer Americans filed first-time applications for unemployment benefits last week as the seasonal volatility at the start of the quarter wound down.
The S&P 500 fell 1.8 percent over the previous two days amid concern about a worsening earnings picture. The index is still up 12 percent this year on speculation central bankers will keep economies expanding.
“The market is zigzagging each day on earnings,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $170 billion. He spoke in a telephone interview. “Earnings did come out better-than- estimated yet revenue surprises are negative.”
Nine out of 11 stocks in a measure of homebuilders in S&P indexes retreated. PulteGroup Inc., the largest U.S. homebuilder by revenue, dropped 3.2 percent to $16.89. Toll Brothers Inc. retreated 3 percent to $34.21.
Cliffs Natural Resources Inc. declined 10 percent to $38.28. Cash costs in Cliffs’ Canadian division rose 21 percent to $106.06 a ton. Costs at the Bloom Lake Mine, which Cliffs acquired with its 2011 purchase of Consolidated Thompson Iron Ore Mines Ltd., increased 18 percent from a year earlier driven by higher fuel, labor, maintenance and supply expenses, the company said in the statement.
Best Buy Co. dropped 9.8 percent to $15.27. The retailer resisting a takeover attempt by its founder said fiscal third- quarter profit will be “significantly” below last year’s results as sales at established stores continue to decline.
United Continental Holdings Inc. slid 4 percent to $19.46. The world’s largest carrier posted third-quarter profit that trailed analysts’ estimates as fuel costs increased while traffic and unit revenue declined.
The New York Times Co. plunged 20 percent to $8.47. The newspaper publisher led by Chairman Arthur Sulzberger Jr. tumbled after reporting a surprise third-quarter loss as total advertising sales fell.
Mead Johnson
Mead Johnson Nutrition Co. dropped 9.3 percent to $63.03. The world’s largest standalone baby formula maker reduced its earnings forecast for the year.
Procter & Gamble added 2.8 percent to $69.99. Chief Executive Officer Bob McDonald is working to introduce new products to regain market share and reduce costs amid pressure from activist investor Bill Ackman. P&G said it held or gained market share in categories representing more than 45 percent of sales in the quarter, up from 30 percent in the fourth quarter.
Symantec Corp. climbed 6.4 percent to $18.49. The biggest security-software maker forecast sales that topped projections. Symantec is doing a better job now at signing up customers at a time of sluggish spending by corporations and weak personal- computer sales, said Daniel Ives, an analyst at FBR Capital Markets & Co.
Casino companies rallied as Wynn Resorts Ltd. added 6.9 percent to $120. The owner of casinos in Nevada and Macau reported profit that beat forecasts and doubled its dividend. MGM Resorts International advanced 2.2 percent to $10.87, while Las Vegas Sands Corp. increased 4.2 percent to $46.16.
Akamai Technologies Inc. surged 6.3 percent to $38.40. The company, which helps businesses deliver data more quickly over the Internet, reported sales and earnings beat estimates. Akamai was also raised to outperform from market perform at Oppenheimer & Co. by equity analyst Timothy Horan. The 18-month target price is $50 per share.
ConocoPhillips gained 1.7 percent to $56.90. The Houston- based oil-and-gas producer said profit excluding one-time costs and gains was $1.44 a share, 25 cents more than the average of 18 analysts’ estimates compiled by Bloomberg.
Angie’s List advanced 25 percent to $11.32. The consumer- review website jumped after reporting sales that beat estimates as more members paid to use the service.
McKesson Corp. increased 4 percent to $93.12. The largest U.S. drug distributor agreed to purchase PSS World Medical Inc. for about $2.1 billion to expand in providing medical supplies and services. PSS World surged 32 percent to $28.59.
Options Market
Investors are flocking to the options market at an unprecedented rate to place bets on Standard & Poor’s 500 Index volatility, a sign they see risks increasing after the calmest election year in two decades.
Outstanding contracts tied to the Chicago Board Options Exchange Volatility Index reached 9.01 million on Oct. 16, the highest level ever, according to data on open interest compiled by Bloomberg. Calls that pay should the VIX increase have almost tripled this year to 4.38 million, while puts climbed 52 percent to 2.14 million, the data show.
Traders are snapping up VIX options after the gauge, which moves in the opposite direction of the S&P 500 about 80 percent of the time, lost 22 percent in 2012 through yesterday. That’s the largest annual drop for any election year since it was created in 1990, according to data compiled by Bloomberg. The VIX has climbed 22 percent since Oct. 18 as the equity gauge retreated 3.3 percent.
“The market is uncertain of the outcome of the election,” Andrew Greeley, a senior managing director at Stamford, Connecticut-based Acorn Derivatives Management Corp., which manages more than $500 million in volatility assets, said yesterday. “It will be range-bound until it is decided. Soon after the election, we could experience a stronger move.”
