U.S. stocks decline on earnings forecasts after five-day rally

Volatility Gauge

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, rose 0.7% to 13.42 today, trimming its decline for the month to 19%.

Seven out of 10 main industries in the S&P 500 declined, with commodity, consumer-discretionary and financial companies dropping at least 0.6% to lead the retreat.

Caterpillar, the world’s biggest maker of construction and mining equipment, slumped 6.1% to $83.76 for the steepest decline since September 2011. The company’s sales and profit are projected to decline for the first time since 2009. Slower demand for commodities in emerging markets has pushed miners to cut capital spending, including purchases of equipment.

Commodity shares slid with gold and copper prices as China’s money-market rates jumped the most since July, spurring concern surging borrowing costs may erode demand in the country, the world’s biggest user of industrial metals.

Cliffs Natural Resources Inc., the largest U.S. iron-ore producer, slid 2.9% to $23.42 while Newmont Mining Corp., the second-largest gold miner, lost 4.1% to $27.29.

Broadcom, Altera

Broadcom slipped 2.9% to $26.36 after it forecast fourth-quarter revenue of about $1.92 billion to $2.03 billion. Analysts on average had predicted $2.13 billion. The company said it’s cutting as many as 1,150 jobs as demand slows for chips that connect mobile phones to the Internet.

Altera Corp. tumbled 13% to $32.30. The maker of programmable semiconductors forecast fourth-quarter sales of $450.4 million at most. That trailed the average analyst estimate of $474.8 million in a Bloomberg survey.

Juniper Networks Inc. dropped 6.4% to $19.05. The world’s second-biggest maker of networking equipment revenue for the current quarter that may miss analyst estimates and is cutting 3% of its workforce, indicating that demand for telecommunications equipment remains inconsistent even though mobile-Internet traffic is surging.

Cree Inc. tumbled 17% to $61.77 as the maker of energy-efficient lighting products reported earnings that missed estimates.

Boeing, Corning

Boeing, the world’s largest planemaker, climbed 5.3% to $129.02, an all-time high. Revenue and free cash flow are surging as Boeing speeds the production tempo for single-aisle 737s, wide-body 777s and 787 Dreamliners to take advantage of airlines’ demand for more fuel-efficient jets. Boeing raised the 787’s planned output rate to 12 a month in 2016, up from a goal of 10 by the end of 2013.

Corning, the maker of glass for televisions and mobile devices, surged 14% to $17.52 for the biggest increase in the S&P 500. The company said it will buy Samsung’s 43% stake in Samsung Corning Precision Materials Co., which makes glass for liquid crystal displays in South Korea.

Apollo Group Inc. surged 28%, its strongest gain ever, to $26.80. The biggest U.S. for-profit college chain posted fourth-quarter profit, excluding some items, of 55 cents a share. That surpassed the 25 cent average of analyst forecasts compiled by Bloomberg.

Norfolk Southern Corp. climbed 6.8% to a record $86.06. The second-largest U.S. eastern railroad posted a third- quarter profit that topped analysts’ estimates because of rising shipments of steel, fracking sand and farm products.

Homebuilders Gain

An S&P index of homebuilders advanced 1.3% with all of its 11 members rising, as 10-year Treasury yields fell to a three-month low. The group has tumbled 21% from this year’s peak in May amid concern rising borrowing costs will temper demand in housing market.

PulteGroup Inc. climbed 0.9% today to $16.68 while Lennar Corp. added 1.1% to $36.55.

“The economy is just in a slow growth mode and we don’t see any deviation from that slow, healing trend,” Jerry Braakman, chief investment officer of First American Trust in Santa Ana, California, said in a phone interview. His firm oversees about $1 billion. “That slow growth continuing just keeps the Fed taper at bay. We think that’s positive for equities.”

www.bloomberg.com

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