BLBG: S&P 500 Little Changed As Economic Data Offset Earnings
U.S. stocks were little changed, after a two-day rally for the Standard & Poor’s 500 Index, as disappointing economic data offset better-than-estimated earnings at International Business Machines Corp. and EBay Inc. (EBAY)
IBM (IBM), the biggest computer-services provider, climbed 4 percent after also boosting its forecast. EBay, the largest Internet marketplace, surged 8.7 percent as more U.S. consumers shopped for new items on the site. Walgreen Co. (WAG) jumped 11 percent on a pharmacy network pact With Express Scripts (ESRX) Inc. Morgan Stanley (MS) slumped 5.2 percent after reporting a 50 percent decline in earnings that was bigger than analysts estimated.
The S&P 500 rose 0.1 percent to 1,374.51 at 10:20 a.m. New York time. The Dow Jones Industrial Average added 11.43 points, or 0.1 percent, to 12,920.13. Trading in S&P 500 companies was up 30 percent from the 30-day average at this time of day.
Stocks pared gains after data showed that sales of previously owned U.S. homes unexpectedly declined in June to an eight-month low. The index of U.S. leading economic indicators fell more than forecast in June, a sign the U.S. economic expansion is slowing. More Americans than forecast filed first- time claims for unemployment insurance payments last week.
The benchmark stock gauge rose 1.4 percent over the previous two days amid optimism about earnings and expectations for government measures to stimulate the economy. Earnings have exceeded analyst estimates at about 70 percent of the 99 S&P 500 companies that have reported quarterly results so far, according to data compiled by Bloomberg. Analysts project a 2.1 percent decline in second-quarter profits, the data showed.
IBM, EBay
IBM climbed 4 percent to $195.82. Its decadelong shift to higher-margin software sales helped the company overcome a slowdown in technology spending last quarter. IBM aims to get half of its earnings from software by 2015 -- a move away from less-profitable hardware and services.
EBay soared 8.7 percent to $43.97. Chief Executive Officer John Donahoe has increased spending on advertising and new technology to expand beyond EBay’s auction roots and let shoppers buy more items in instant sales, similar to those on Amazon.com Inc.’s site. Those efforts led to gains in EBay’s Marketplaces unit as total U.S. online sales jumped 15 percent in the quarter, according to ComScore Inc.
Qualcomm Inc. (QCOM) increased 3.1 percent to $57.80. The largest seller of mobile-phone semiconductors gained after quarterly results showed consumers in emerging markets are trading up to next-generation handsets, lifting profitability.
Walgreen’s Pact
Walgreen surged 11 percent to $34.42. The largest U.S drugstore chain will be part of the network of pharmacies available to Express Scripts clients as of Sept. 15, the companies said in a statement today. Terms weren’t disclosed. Express Scripts rallied 1.9 percent to $58.80. CVS Caremark Corp. (CVS) tumbled 4.6 percent to $46.38.
Morgan Stanley slumped 5.2 percent to $13.27. Chief Executive Officer James Gorman is trying to show improvements in profitability amid a slowdown in the investment-banking and trading businesses that account for half the firm’s revenue.
Verizon (VZ) Communications Inc., the second-largest U.S. phone company, dropped 1.7 percent to $45.14. Second-quarter net income attributable to Verizon rose to $4.29 billion, or 64 cents a share, from $3.6 billion, or 57 cents, a year earlier. That matched the average estimate of analysts, according to data compiled by Bloomberg.
Millionaires’ Investment
Millionaires added U.S. stocks more than any other asset in the latest year as average investors fled to bonds, according to a survey by Fidelity Investments.
Twenty percent of the 1,020 households surveyed said they bought individual domestic equities in the 12 months ended in March, the Boston-based mutual fund firm said. Cash ranked second, with 13 percent saying they added to that asset class. Eleven percent purchased exchange-traded funds, and 10 percent each added individual U.S. bonds or domestic stock funds.
The broader investing public has sought refuge in fixed income since the global credit crisis sent the S&P 500 (SPX) down 38 percent in 2008, eight years after the meltdown in technology stocks. U.S. equity mutual funds suffered net withdrawals of $130 billion in the 12 months ended March 31, according to Chicago-based research firm Morningstar Inc. Bond funds attracted $191 billion. The S&P 500 gained 9.2 percent this year through yesterday.
“They’re probably ahead of the average investor in how they view opportunities,” Bob Oros, executive vice president in Fidelity’s institutional wealth services group, said of millionaires in an interview. “They’re becoming less and less risk-averse.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net
