“The recent economic news has been solid but now the market will look to see where earnings come in to drive the next leg up if we continue in this trend,” said James Dunigan, who helps oversee $112 billion as chief investment officer in Philadelphia at PNC Wealth Management. “We have rebounded nicely after the stumble from the Fed meeting in June so we will start to run into some resistance as we head higher.”
The S&P 500 has dropped 3.4% since May 21, the day before Fed Chairman Ben S. Bernanke signaled the central bank could scale back asset purchases if the economy improves in line with forecasts. The benchmark gauge rallied 13% in the first half of the year, the best performance since a 17% gain in the first six months of 1998.
The Chicago Board Options Exchange Volatility Index, or VIX, added 1.1% today to 16.55. The equity volatility gauge, which moves in the opposite direction as the S&P 500 about 80% of the time, reached a six-year low in March and has since surged 47%.
Seven of 10 S&P 500 industries fell as industrial and raw- material companies dropped more than 0.5%. Energy and telephone stocks climbed at least 0.1%.
DaVita HealthCare tumbled 6.3% to $113.56. Dialysis- center operators may see U.S. payments reduced 9.4% in 2014 under a Medicare proposal. The government will consider phasing reductions over more than a year, the Health and Human Services Department said yesterday in a regulatory filing. The proposal is subject to public comment and may change before taking effect.
Constellation Brands lost 3.2% to $51.46. The wine company reported adjusted first-quarter earnings of 38 cents a share, missing the average analyst estimate of 40 cents.