S&P500 Fluctuates Near Record as Economic Data Miss Forecasts
New York (May 15) US stocks fluctuated, with the Standard & Poor’s 500 Index near a record, as investors speculated the Federal Reserve would continue to support economic growth after data showed an unexpected drop in consumer confidence and weak factory output.
Netflix Inc. added 4.5 percent after people familiar with the matter said the company is in partnership talks with Wasu Media Holding Co., a Chinese media firm backed by Jack Ma. Applied Materials Inc. climbed 3 percent after forecasting sales that may beat analysts’ estimates. Keurig Green Mountain Inc. lost 7.2 percent.
The S&P 500 rose less than 0.1 percent to 2,121.37 at 10:48 a.m. in New York. The gauge is up 0.2 percent this week after falling as much as 0.8 percent before Thursday’s rally. The Dow Jones Industrial Average slipped 0.94, or less than 0.1 percent, to 18,251.30. The Nasdaq Composite Index was little changed.
“The data plays into the renewed concern that economy in the second quarter will move at a glacial place, renewing hope that the Fed won’t move aggressively in 2015,” said Chad Morganlander, a money manager at Stifel, Nicolaus & Co., which oversees about $170 billion. “The market is listless today and you had a big move yesterday that took everybody by surprise on the back of economic data.”
Consumer confidence unexpectedly fell in May by the most in more than two years. The University of Michigan preliminary index of sentiment dropped to 88.6, the lowest since October, from 95.9 in April. The decrease was the largest since December 2012.
Factory Output
A separate report showed factory production stalled in April, with the unchanged reading in manufacturing following a 0.3 percent March gain that was larger than previously estimated, a report showed Friday. A Bloomberg survey of economists called for a 0.2 percent increase.
Total industrial production declined for a fifth consecutive month amid mining and utilities cutbacks. The data add to previous reports that show economic growth isn’t strong enough to warrant higher interest rates.
A report Thursday showed wholesale prices unexpectedly declined in April from the prior month, indicating inflation is well-contained as Fed officials weigh when to raise the benchmark rate.
Markets Stabilize
The dollar’s retreat yesterday spurred gains in American multinational companies, helping the S&P 500 erase declines earlier in the week and close at a new high. The weaker dollar lessens the drag on the economy and corporate profits as it makes exports more competitive. Bond markets are also recovering after a selloff that has rippled through equity markets.
Concern the Fed would raise interest rates even with worsening economic data and predictions for earnings declines have whipsawed stocks between gains and losses in the past six weeks.
With the earnings season drawing to a close, S&P 500 members are now on track to deliver income growth of 0.2 percent in the first quarter, compared with projections for a 5.8 percent decline as recently as March.
Source: Bloomberg
