U.S. Stocks Retreat as Energy Shares Decline With Oil
New York (Oct 22) U.S. stocks retreated, after the Standard & Poor’s 500 Index rose the most in a year yesterday, as energy shares declined amid a drop in oil prices.
Cimarex Energy Co. and Helmerich & Payne Inc. lost more than 2.5 percent to lead declines in 39 of 43 energy shares in the S&P 500. Yahoo! Inc. added 5.3 percent after sales topped estimates. Broadcom Corp. jumped 6.3 percent after reporting earnings that beat analysts’ estimates and giving a forecast that eased concern chip orders might be drying up. Biogen Idec Inc. slid 5.7 percent as sales of its top drug, Tecfidera, missed analyst estimates.
The S&P 500 slipped 0.3 percent to 1,935.07 at 1:37 p.m. in New York. The Dow Jones Industrial Average slid 90.89 points to 16,523.92. The Nasdaq Composite Index lost 0.4 percent. Crude oil slid 1.8 percent to $81.30 a barrel, the lowest level on a closing basis in more than two years, after a U.S. report showed inventories increased by 7.11 million barrels last week.
“It might be kind of a slow reflection day today,” Randy Bateman, the chief investment officer of Huntington Asset Advisors, which manages about $3.5 billion, said by phone. “We’ll probably just have a little digestion from yesterday. Right now, we’re looking at earnings being the driving force of this market. There will be winners and losers.”
Related: Why the Stock Market Rally Is Bad News
Four consecutive advances in the S&P 500 through yesterday have pushed the gauge up 4.2 percent since Oct. 15, recouping half the losses from a selloff that began in mid-September. The equity index surged 2 percent yesterday, its best day since October 2013, as speculation the European Central Bank will boost stimulus to spur growth in the region.
Inflation Data
The cost of living in the U.S. barely rose in September, leaving inflation below the Federal Reserve’s goal as fuel prices plunge this month. The consumer-price index climbed 0.1 percent after decreasing 0.2 percent in August, a Labor Department report showed.
BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday the selloff last week in U.S. equity markets “weeded out the excesses,” making stocks a good investment for those who aren’t going to sell their positions soon.
“As a long-term investor, yes, I’d be buying equities,” Fink said yesterday in an interview with Bloomberg Television’s Erik Schatzker. “This is just a market correction, and we need market corrections to clean the market out.”
‘Best Place’
His remarks were echoed by billionaire hedge-fund manager Dan Loeb. Loeb, who runs Third Point LLC, told investors in a letter yesterday that “going forward, we expect that the U.S. will remain the best place to invest” and that “markets will resume an overall upward trajectory in the U.S. through year-end.”
Almost 80 percent of S&P 500 companies that have released quarterly results this season beat profit projections, while 63 percent surpassed revenue estimates. Profit for index members rose 5.9 percent in the third quarter and sales increased 4 percent, analysts predicted.
The Chicago Board Options Exchange Volatility Index added 5.5 percent to 17. Trading in S&P 500 stocks was in line with the 30-day average at this time of day.
Yahoo, Broadcom
Seven of 10 main industries in the S&P 500 declined. Energy shares slipped 0.5 percent as a group for the biggest decline as crude oil slid 1.4 percent. Utilities shares gained 0.8 percent for the biggest advance.
Yahoo climbed 5.3 percent to $42.29. The Web portal reported third-quarter revenue, excluding sales shared with partner websites, that beat estimates and forecast sales of $1.14 billion to $1.18 billion for the current period, exceeding analysts’ average prediction of $1.17 billion.
Chief Executive Officer Marissa Mayer detailed in a conference call after earnings results how Yahoo has bought back 24 percent of shares since late 2012 and said the company’s dealmaking has been “meaningful.” She added that Yahoo is making progress in mobile and the Web portal has been focused on cost efficiencies.
Broadcom jumped 6.3 percent to $39.67. Excluding certain charges, profit last quarter was 91 cents, topping an average analyst estimate of 84 cents. The maker of communications chips also said revenue in the current period will be $2 billion to $2.15 billion, compared with an average estimate of $2.11 billion, according to data compiled by Bloomberg.
Six Flags Entertainment Corp. soared 14 percent to $39.17, poised for its biggest one-day gain on record. The theme park operator reported adjusted earnings per share and revenue last quarter that beat analysts’ estimates.
Biogen Idec slumped 5.7 percent to $308.22. Revenue from Tecfidera was $787 million in the third quarter, falling short of the average analyst estimate of $794 million. A patient on the treatment died after developing a rare brain infection known as progressive multifocal leukoencephalopathy, or PML, Chief Executive Officer George Scangos said on a call.
Source: Bloomberg
