BackUS stocks fluctuate as bond concerns offset corporate deals
Weaker-than-forecast retail sales disappointed investors who were expecting a rebound from a winter slowdown
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New York: US stocks fluctuated as corporate deal activity was offset by concern a fixed-income selloff may resume, and weaker-than-forecast retail sales disappointed investors who were expecting a rebound from a winter slowdown.
Owens-Illinois Inc. climbed 9% after a pact to buy the food-and-beverage glass business of Vitro SAB. Williams Cos. rallied 5% as it plans to buy the 40% of Williams Partners LP it doesn’t already own. Danaher Corp. advanced 2.2% and Pall Corp. added 4.8% after their $13.8 billion deal. Retailers’ shares slipped after April sales data disappointed investors .
The Standard & Poor’s 500 Index added 0.1% to 2,102 at 11:44 am in New York. The gauge slid on Tuesday as a rout in fixed-income markets spread to equities. The Dow Jones Industrial Average gained 9.18 points, or 0.1%, to 18,077.41. The Nasdaq Composite Index increased 0.3%.
“We’ve been at the mercy of the bond market because of a news vacuum with corporate earnings finished and a light economic calendar, but equities have been remarkably resilient in the face of yields and uncertainty about when the Fed will pull the trigger," said Kelly Bogdanov, the San Francisco-based vice president and portfolio analyst at RBC Wealth Management. “The fact that we’re up near these highs is a positive."
Retail sales
The unchanged April retail sales reading followed a revised 1.1% gain in March that was the biggest in a year and larger than previously estimated. Economists surveyed by Bloomberg called for a 0.2% gain in April. Data are also due later this week on consumer sentiment, jobless claims and industrial production.
Concern the Fed would raise rates even with worsening economic data and predictions for an earnings slump have whipsawed stocks between gains and losses in the past five weeks. The S&P 500 fell for the past two days after jumping the most since March on Friday amid data that showed hiring bounced back in April from a winter slowdown.
“We had a couple down days and now all this bad data just pushes out the Fed longer to tighten," said Frank Ingarra, head trader at Greenwich, Connecticut-based Northcoast Asset Management LLC. Northcoast has $3 billion under management. “It’s going to be range-bound trading until we get something that will break us through, either the Fed saying they won’t tighten or some phenomenal economic data."
Earnings growth
Cisco Systems Inc. and J.C. Penney Co. Inc. are among four S&P 500 companies posting earnings on Wednesday. Most companies in the benchmark have already reported results this season, with 72% beating earnings estimates. Analysts now project profit at S&P 500 members grew 0.2% in the first quarter, reversing earlier predictions for a decline. Their March estimates called for a 5.8% drop.
The Chicago Board Options Exchange Volatility Index fell 1.8% to 13.61, after ending little changed Tuesday. The gauge, known as the VIX, is on track for its third straight weekly gain for the first time since September.
Semiconductors rebounded after a 0.9% drop Tuesday, lifting technology shares. Micron Technology Inc. and Intel Corp. rose more than 1.1%.
Microsoft Corp. added 1.4% after Deutsche Bank analyst Karl Keirstead upgraded shares to buy from hold, citing “relatively cheap" valuation with more positive than negative catalysts.
Owens-Illinois
Qualcomm Inc. advanced 1.7% as the chipmaker plans to tap the corporate bond market for the first time, with proceeds to be used for general corporate purposes, including financing a capital return program and acquisitions.
Owens-Illinois Inc. rallied 9%, heading for the biggest jump since 2009, after the world’s largest maker of glass containers agreed to buy Vitro’s business for about $2.15 billion to extend its reach in Mexico.
Macy’s Inc. slumped 2.1% after the largest US department-store chain reported first-quarter earnings that trailed analysts’ estimates as bad weather in Northeastern states and product delays at the West Coast ports hurt sales. Ralph Lauren Corp. and Fossil Group Inc. fell at least 3% to pace a retreat in consumer discretionary shares.
DuPont Co. lost 6.5%, the biggest loss since 2012, as investors rejected investor Nelson Peltz’s attempt to get on the chemical maker’s board, the first failure for an activist campaign mounted by his firm Trian Fund Management since it was founded a decade ago. Bloomberg
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