U.S. stocks fluctuate as House passes budget deal

December 13, 2013 10:35 AM

U.S. stocks fluctuated, with the Standard & Poor’s 500 Index poised for the biggest weekly loss since August, as losses in oil producers and phone shares offset gains after the House of Representatives passed a budget deal.

Adobe Systems Inc. climbed 12% as it attracted more subscribers to its online software in the quarter than some analysts had predicted. Texas Industries Inc. jumped 13% as people familiar with the matter said it is seeking a buyer. Anadarko Petroleum Corp. fell 7.6%, leading energy stocks lower as a judge ruled the company may have to pay as much as $14 billion in a case related to the spinoff of Tronox Inc.

The S&P 500 rose 0.2% to 1,778.25 at 3:24 p.m. in New York. The equity benchmark has fallen 1.5% this week, poised for the biggest decline since August. The Dow Jones Industrial Average gained 44.35 points, or 0.3%, to 15,738.78 today. Trading in S&P 500 stocks was 8% less than the 30-day average at this time of day.

“Investors are a little tired after 12 months of the market,” John Manley, who helps oversee $233.6 billion as chief equity strategist for Wells Fargo Funds Management in New York. “The budget accord is a plus right now, but there are more technical forces at work. People are looking for gains before year-end.”

Monetary Stimulus

The S&P 500 has surged 25% this year, putting it on course for the biggest annual gain since 2003, as the Fed continued to buy assets. Three rounds of monetary stimulus -- or quantitative easing -- from the central bank have helped propel the index to a 163% rally from a 12-year low in 2009.

The House passed a budget late yesterday that limits automatic spending cuts and avoids another government shutdown. The deal protects entitlement programs favored by the Democrats and corporate tax breaks that Republicans have demanded. Almost equal numbers of lawmakers from both political parties voted for the compromise. The Senate needs to approve the legislation and President Barack Obama has to sign it.

“Everyone’s just pleased that they got a budget deal done and that they were able to work out a compromise,” Dan McMahon, director of equity trading at Raymond James Financial Inc. in New York, said in a phone interview. “There’s a lot of anticipation about the Fed meeting next week. There’s the potential that they could talk about some tapering, though I think it’s probably unlikely.”

Energy Stocks

Energy producers slid 0.4%, the most among 10 main groups in the S&P 500. West Texas Intermediate fell as much as 1.3%. Stockpiles of gasoline and distillate fuels, including diesel and heating oil, jumped the most last week since Jan. 4, the Energy Information Administration reported on Dec. 11.

Anadarko tumbled 7.6% to $77.33. The company and its Kerr-McGee unit acted improperly in the 2005 spinoff of Tronox and may have to pay as much as $14 billion related to environmental cleanup and health claims, a judge ruled.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options known as the VIX, slipped 0.8% to 15.41 after three days of gains.

The S&P 500 yesterday fell to its lowest level since Nov. 12 as a better-than-forecast retail-sales report fueled speculation that the Federal Reserve will decide to taper asset purchases as early as next week. Central-bank officials have watched Washington’s budget negotiations and scrutinized economic data to determine whether the recovery is sufficiently robust to slow their bond-buying program.

Fed Policy

Some 34% of economists predict that policy makers will decide to reduce the $85 billion of monthly asset purchases at the Dec. 17-18 meeting, according to a Bloomberg poll on Dec. 6. That compared with the 17% that forecast tapering at next week’s meeting in a Nov. 8 poll.

The S&P 500 may climb 17% to 2,075 by the end of next year as profit growth accelerates and U.S. monetary remains supportive, Thomas Lee, JPMorgan Chase & Co.’s chief U.S. equity strategist, wrote in a research report today. Large technology companies provide the most attractive opportunity for outperformance, he said.

Adobe jumped 12% to $60.52. The company said yesterday that it signed up online customers at a faster-than- projected clip, adding to evidence the largest maker of graphic- design software is reducing its dependence on the slumping personal-computer market.

Texas Industries surged 13% to $65.99. The owners of the Dallas-based cement company are working with Citigroup Inc. to find a buyer, three people familiar with the matter said late yesterday. The business may attract Switzerland’s Holcim Ltd. and U.S. competitor Vulcan Materials Co., one of the people said.

Vulcan Materials, a maker of concrete and cement, climbed 3.3% to $56.22.

Electronic Arts Inc. increased 6.1% to $22.25. U.S. sales of video-game hardware jumped 58% in November from the prior year, NPD Group Ltd. said yesterday. Piper Jaffray Cos. analyst Michael Olson said titles such as Battlefield and Call of Duty have sold “reasonably well.”


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