U.S. stocks were little changed, after the Dow Jones Industrial Average closed above 16,000 for the first time yesterday, as improving economic data offset concerns that the Federal Reserve will cut monetary stimulus as soon as next month.
Time Warner Cable Inc. surged 7.7% on renewed takeover speculation. United Continental Holdings Inc. climbed 2.4% after billionaire David Tepper said that his “big play in the market” is airlines. Foot Locker Inc. rallied 3.6% after it posted higher-than-estimated quarterly earnings. Ross Stores Inc. plunged 7.5% after cutting its earnings forecast.
The Standard & Poor’s 500 Index rose 0.1% to 1,798.14 at 10:18 a.m. in New York. The U.S. equity benchmark is poised to end the week little changed, halting a six-week streak of gains. The Dow average fell 11.78 points, or less than 0.1%, to 16,021.77.
“I don’t see any reason why the market shouldn’t go up,” Karyn Cavanaugh, a vice president and market strategist at ING U.S. Investment Management in New York, said in a phone interview. Her firm oversees $196 billion. “There’s not really any bad news. We have a little bit of a pullback and then people jump in and say, ’Hey, I want a piece of this.’”
The S&P 500 rallied yesterday after three days of losses as data showed weekly jobless claims fell to the lowest level since September and a confidence survey indicated American consumers became less pessimistic this month. The Dow average has climbed 0.3% this week, headed for its seventh straight weekly gain, the longest streak since January 2011.
Economic stimulus from the Fed has helped the S&P 500 soar 166% since its March 2009 low. The index rallied 26% this year, poised for its best annual performance in a decade. The gauge traded for about 17 times its companies’ reported earnings at its last record on Nov. 15, the highest valuation since May 2010.
Tepper, the hedge-fund manager who runs Appaloosa Management LP, said stock markets are not inflated as economies in the U.S., Europe and China are on “firm ground.” He said that while he remains bullish on U.S. stocks, markets may fall 5% to 10% when the Fed curbs its monthly stimulus program. He said his firm recently bet against U.S. Treasuries as a hedge.
“I know there’s talk about bubbles, this is not one,” Tepper said in an interview with Bloomberg Television’s Stephanie Ruhle at the Robin Hood Investors Conference in New York yesterday.
United Continental rose 2.4% to $38. Goldman Sachs Group Inc. also lifted its rating on the world’s biggest airline to buy from neutral.
Foot Locker rallied 3.6% to $38.10. The largest U.S. athletic shoe retailer posted third-quarter earnings of 68 cents a share, exceeding the average analyst estimate by 2 cents.
Time Warner Cable, the second-largest U.S. cable company, jumped 7.7% to $130.18. Charter Communications Inc., backed by billionaire John Malone, is in talks with banks about financing an attempt to buy Time Warner Cable, the Wall Street Journal said yesterday. CNBC reported today that Comcast Corp. investors are pushing for the company to make its own bid for Time Warner Cable.
Ross Stores tumbled 7.5% to $74.25. The retailer of discount designer wear lowered its forecast for fourth-quarter earnings to no more than $1.01 a share, after previously predicting as much as $1.03. That fell short of the average analyst estimate of $1.08.
Intel Corp. lost 2.7% to $24.54. The world’s largest maker of semiconductors said revenue will be approximately unchanged in 2014. The company predicts the personal-computer market, measured by units, to be down in the ‘low single-digit’%, Chief Financial Officer Stacy Smith said.
Abercrombie & Fitch Co. slid 3.8% to $33.63. The retailer was cut to market perform from outperform at Wells Fargo Securities.