New York: US stocks rebounded late on Monday to end flat, shrugging off lighter-than-expected sales from McDonald’s and lowered iPhone prices from Apple.
The three major US stock indexes had fallen more than 1% before rallying in the last hour of trading, led by bank shares.
Analysts pointed to the S&P 500’s recent piercing of its 200-day moving average as a positive sign, giving investors confidence to buy stocks on dips in the market.
“What we’re seeing is investors, both institutional and individuals, looking at dips as an opportunity to buy,” said Bucky Hellwig, senior vice president at Morgan Asset Management in Birmingham, Alabama.
The S&P 500 has rallied 39% since hitting a 12-year closing low on 9 March, leading analysts to speculate a correction was looming, although recent dips have been short-lived.
“The market has been in an uptrend and ever since we broke through that 200-day moving average, the market has been acting pretty well,” said Todd Leone, head of listed trading at Cowen & Co. in New York.
The Dow Jones industrial average gained 1.36 points, or 0.02%, to 8,764.49. The Standard & Poor’s 500 Index dropped 0.95 of a point, or 0.10%, to 939.14. The Nasdaq Composite Index dropped 7.02 points, or 0.38%, to 1,842.40.
After the closing bell, shares of Texas Instruments Inc jumped 5.2% to $20.80 after the chip supplier raised its earnings per share and revenue outlook for the second-quarter.
Financial stocks led the rebound, with JP Morgan Chase & Co up 2.4% at $35.39. The big US banking company’s stock gave the biggest lift to the Dow as investors awaited news from Federal Reserve and Treasury officials, who are expected to announce which banks will be allowed to repay TARP money soon. The KBW Bank index added 1.3%.
McDonald’s was the blue-chip Dow’s primary laggard after the world’s largest hamburger chain said May sales at US restaurants open at least 13 months rose 2.8%, but were significantly less than the 6.1% growth in the previous month. The stock lost 1.9% to $58.72.
Apple shares slid 0.6% to $143.85. The stock was the heaviest weight on the Nasdaq after the company cut the price on its base model 8-gibabyte iPhone. Earlier, Apple unveiled a cheaper Mac notebook at its annual developers’ conference.
AT&T Inc shares slid 0.7% to $24.40 on the New York Stock Exchange after the exclusive carrier of Apple’s iPhone was removed from the “conviction buy” list at Goldman Sachs, which cited the stock’s recent underperformance.
AT&T said late in the session that it will start selling the reduced price iPhones without impacting its profit targets.
Trading volume was low on the New York Stock Exchange, with about 1.08 billion shares changing hands, well below last year’s estimated daily average of 1.49 billion, while on Nasdaq, about 2.00 billion shares traded, below last year’s daily average of 2.28 billion.