U.S. stocks retreat with gold, oil as euro strengthens

U.S. Movers

Among stocks moving today, American Eagle Outfitters Inc. fell 14%, the most on a closing basis in three years, after the teen apparel chain yesterday said second-quarter profit was less than it forecast amid disappointing sales of women’s clothing and weak shopper traffic. Abercrombie & Fitch Co. lost 3.8%. CVS Caremark Corp. slid 2.5% after its forecast for full-year adjusted earning-per-share trailed analysts’ estimates.

International Business Machines Corp. declined 2.4% today after saying it’s requiring the majority of its U.S. employees in the hardware unit to take a week off with reduced pay as it cuts costs amid slowing demand for products such as servers. Credit Suisse Group AG cut the company’s rating to the equivalent of sell, saying IBM has fewer ways to manage its portfolio to reach its earnings goals and has seen “gradual decline in the company’s competitive position across its industries.”

Valuation Watch

Washington Post Co. climbed 4.3% after agreeing to sell the Washington Post newspaper to Amazon.com Inc. Chief Executive Officer Jeff Bezos for $250 million.

The S&P 500 closed at a record of 1,709.67 on Aug. 2, pushing its valuation to a three-year high. The benchmark index ended last week trading at 15.5 times estimated earnings, compared with an average of 13.9 over the last five years, data compiled by Bloomberg showed. The index is up 19% in 2013 and has rallied about 151% from its bear-market low in 2009.

“The U.S. market is a bit overbought at the moment,” said Enrico Carbonelli, a Lugano, Switzerland-based associate director of portfolio management at BSI SA, which oversees the equivalent of $93 billion. “In the coming month, we may see a little bit of a correction before going higher. There’s a bit of concern about the Fed tapering its stimulus, but bonds will probably suffer more than equities.”

Low Volume

Volume of exchange-listed stocks reached 4.65 billion yesterday, the slowest full-day trading this year, data compiled by Bloomberg show. Intraday price swings have narrowed, with fluctuations in the S&P 500 averaging 0.65% during the past 20 days through yesterday, the smallest change over a comparable period since Feb. 1, the data show.

Per-share adjusted earnings have increased 3.2% for the 419 companies in the S&P 500 that posted results so far in the reporting season, with 73% beating the average analyst estimate. Analysts project companies in the gauge will increase their third-quarter earnings per share by 3.3% from a year earlier, and their profit in the fourth quarter by 9.9%, according to estimates compiled by Bloomberg.

The Stoxx 600 closed at a nine-week high yesterday following six straight days of gains. Losses today were led by commodity, utility and insurance companies as 14 of the index’s 19 industry groups retreated. Germany’s DAX Index slumped 1.2% today, the most in a month.

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