U.S. stocks little changed on Fed stimulus speculation, earnings

U.S. stocks were little changed, after the first drop in five days for the Standard & Poor’s 500 Index (CME:SPZ13), as investors assessed corporate earnings and speculated on when the Federal Reserve will cut stimulus.

Facebook Inc. and Exxon Mobil Corp. jumped more than 1.3% after earnings topped estimates. Boeing Co. advanced 1% after saying it would step-up production of its 737 jets. Visa Inc. lost 2.9% as the bank-card network said revenue rose less than projected. Avon Products Inc. fell 24% after saying possible fines related to foreign bribery probes may hurt earnings.

The S&P 500 rose less than 0.1% to 1,763.92 at 3:18 p.m. in New York, after fluctuating between gains and losses during the day. The Dow Jones Industrial Average slipped 4.27 points, or less than 0.1%, to 15,614.49. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.

“We don’t expect anything really before the March time frame,” David Roda, the Miami-based regional chief investment officer for Wells Fargo Private Bank, said in a phone interview, referring to the possibility of a tapering of Fed stimulus. His firm manages $170 billion. “Even though the jobs data is slowly improving, the pace of improvement has slowed and the quality of job growth is certainly not that great.”

The S&P 500 fell 0.5% from a record yesterday, halting four days of gains, as the Fed fueled bets it may begin to cut stimulus in the coming months. The central bank maintained $85 billion in monthly bond purchases, saying that while the economy shows signs of “underlying strength” it needs to see more evidence of sustainable improvement.

Taper Odds

Economists at Citigroup Inc. and Barclays Plc said yesterday’s Fed policy statement opens the possibility of reduced bond purchases as soon as December. The odds of a taper in January rose to 45%, from 25% before the decision, according to Citigroup. Economists surveyed by Bloomberg Oct. 17-18 had predicted the Fed would begin paring stimulus in March.

Fed stimulus has helped propel the S&P 500 higher by more than 160% from a 12-year low in 2009. The gauge has surged 4.9% in October, heading for the biggest monthly gain since July, as lawmakers ended a 16-day government shutdown and agreed to extend the U.S. borrowing authority, avoiding a possible debt default.

Stocks slumped earlier today after a report showed business activity in the U.S. expanded in October as orders and production surged. The MNI Chicago Report business barometer jumped to 65.9 from 55.7 in September, the biggest monthly increase in more than three decades. Readings above 50 signal expansion.

Separate data showed fewer Americans filed applications for unemployment benefits last week as a backlog in California’s reporting cleared.

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