U.S. stocks declined, erasing an early advance, after partial election results spurred concern about prospects for a stable government in Italy.
Chesapeake Energy Corp. slumped 5.4% after agreeing to sell a stake in an Oklahoma oilfield to China Petrochemical Corp. for less than one-third of its estimated value. ITT Educational Services Inc. tumbled 14% after disclosing that U.S. regulators subpoenaed documents related to private loan programs for its students. Hertz Global Holdings Inc., the largest publicly traded U.S. auto-rental chain, gained 4.2% after projecting profit and sales that beat estimates.
The Standard & Poor’s 500 Index retreated 0.7% to 1,504.31 at 2:52 p.m. New York time, after gaining as much as 0.7% earlier today. The Dow Jones Industrial Average decreased 80.18 points, or 0.6%, to 13,920.39. Trading in S&P 500 companies was in line with the 30-day average at this time of day, according to data compiled by Bloomberg.
“We don’t want to see more chaos out of Europe,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees more than $20 billion. “Any question about whether or not Italy would be committed to austerity measures after the elections gets investors concerned.”
Stocks erased gains on concern Italy may be left with a hung parliament as partial election results suggested Silvio Berlusconi may have built a blocking minority in the Senate to deny victory to Pier Luigi Bersani. Bersani, who led in opinion polls throughout the two-month race, campaigned to maintain the budget rigor of outgoing Prime Minister Mario Monti. Bets Japan’s Prime Minister Shinzo Abe will nominate a central bank chief who favors stimulus pushed stocks higher earlier today.
This week’s March 1 deadline to avoid automatic U.S. spending cuts may get investors’ attention. It marks another fiscal showdown between President Barack Obama and congressional Republicans. If Congress doesn’t act, federal spending will be reduced by $85 billion in the final seven months of this fiscal year and by $1.2 trillion over the next nine years.
The S&P 500 has gained 5.4% this year as U.S. lawmakers agreed on a compromise on taxes in January and amid better-than-estimated corporate earnings. About 75% of the S&P 500 companies that have released quarterly results beat profit estimates, according to data compiled by Bloomberg. The index trades at 14.9 times reported earnings, below the average since 1954 of 16.4.
“Continued earnings momentum and rising corporate confidence suggest improved capital spending this year,” said James Paulsen, the chief investment strategist at Minneapolis- based Wells Capital Management, which oversees about $325 billion.
The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, surged 19% to 16.80. The gauge is poised for the highest close this year after sliding to the lowest level since April 2007 on Feb. 19.
Chesapeake Energy declined $1.11 to $19.40. Sinopec, as China’s second-largest energy producer is known, will pay $1.02 billion in cash for a 50% interest in 850,000 acres Chesapeake controls in the Mississippi Lime formation, the companies announced in separate statements. The price equates to $2,400 an acre, less than the $7,000 to $8,000 at which Oklahoma City-based Chesapeake valued the asset in a July presentation.
ITT Educational tumbled $2.67 to $15.96. The Securities and Exchange Commission demanded documents relating to “actions and accounting” for the private loan programs, which helped students pay for education costs that weren’t covered by state, federal and other funding sources, Carmel, Indiana-based ITT said Feb. 22 in a filing.
Dynavax Technologies Corp. dropped 30% to $2.09. The drugmaker seeking to bring its first product to market fell after U.S. regulators rejected the company’s hepatitis B vaccine.
Affymax Inc. sank 85% to $2.46 after the drugmaker and partner Takeda Pharmaceutical Co. voluntarily recalled an anemia treatment for kidney dialysis patients after reports of three fatal reactions.
Hertz gained 79 cents to $19.52. Adjusted earnings per share for 2013 will rise to $1.82 to $1.92, on sales of as much as $10.95 billion, the Park Ridge, New Jersey based company said today in a statement. Analysts projected $1.73 a share on revenue of $10.6 billion, the average of estimates compiled by Bloomberg.
BlackBerry, formerly known as Research In Motion Ltd., jumped 1.1% to $13.33. Sales of BlackBerry 10 devices are above the company’s “ambitious” expectations and production has been increased, chief executive officer Thorsten Heins told Frankfurt Allgemeine.
Barnes & Noble
Barnes & Noble Inc. added 12% to $15.11 after Chairman Leonard Riggio said he will offer to buy the stores and website of the chain he founded more than 40 years ago as it struggles to navigate the rising popularity of digital books.
Zynga Inc. rose 10% to $3.52. The biggest maker of online social games surged on optimism that other U.S. states may follow Nevada in legalizing real-money gambling over the Internet.
Cummins Inc. increased 0.5% to $113.39 after the maker of diesel engines was added to the “Conviction Buy” list at Goldman Sachs Group Inc.
CME Group Inc., the world’s largest futures exchange, has approached Deutsche Boerse AG to consider beginning talks on a merger, according to four people familiar with the situation.
A combination of Chicago-based CME and Deutsche Boerse would unite the biggest futures exchanges in the U.S. and European markets. CME shares have rallied 15% this year, giving it a market capitalization of $19.4 billion. Deutsche Boerse climbed 1% through Feb. 22, bringing its value to 9 billion euros ($11.9 billion).
The companies met again last month to debate whether to begin formal takeover talks and haven’t yet made a decision, the people said. No offer has been made, nor have terms been discussed, they said.