BLBG: U.S. Stocks Little Changed After Durable Goods, Earnings
U.S. stocks were little changed, after the Standard & Poor’s 500 Index rose to its highest level since December 2007, as orders for durable goods climbed last month and investors watched earnings.
Caterpillar Inc. added 2.6 percent as it forecast faster growth in its second half. Facebook Inc. (FB) rose 2.3 percent as options traders were the most bullish on the shares on record. AK Steel Holding Corp. lost 3.8 percent after Goldman Sachs Group Inc. downgraded the shares.
The S&P 500 (SPX) fell 0.1 percent to 1,502.05 at 9:48 a.m. in New York. The equity benchmark closed above 1,500 last week for the first time since December 2007. The Dow Jones Industrial Average added 6.49 points, or 0.1 percent, to 13,902.47 today. Trading in S&P 500 companies was 12 percent above the 30-day average at this time of day.
“The sentiment is really, really bullish,” Barry James, who helps oversee $3.5 billion as president of James Investment Research in Xenia, Ohio, said in a phone interview. “That is a little bit of a warning sign to us that we could be more in a topping phase than actually a new bull phase. It would take a lot to really convince everyone that happy days are here, and we can just ride this off into the sunset.”
Orders for durable goods in the U.S. rose 4.6 percent in December after a 0.8 percent gain the prior month, a Commerce Department report showed today in Washington. Excluding demand for transportation equipment, which is volatile month to month, orders rose 1.3 percent. The median forecast of 76 economists surveyed by Bloomberg called for a 2 percent gain in overall orders.
House Sales
A separate release from the National Association of Realtors will show that its index of pending house sales was unchanged last month after increasing 1.7 percent in November, economists surveyed by Bloomberg projected.
Nine companies on the S&P 500 are scheduled to report earnings today. Of the 150 companies that have released results so far this quarter, 75 percent have exceeded profit projections, while 67 percent have beaten sales estimates, according to data compiled by Bloomberg.
The S&P 500 has more than doubled from a 12-year low in 2009 as corporate earnings have climbed for three years and the Federal Reserve has increased its bond purchases to keep interest rates low to spur growth. The S&P 500 is about 4 percent below its all-time high of 1,565.15 set in October 2007.
Facebook rose 2.3 percent to $32.26 as the ratio of outstanding calls to buy the stock versus puts to sell reached 1.51-to-1 last week, the highest level since the options began trading after the company’s initial public offering in May, according to data compiled by Bloomberg. The shares have surged 78 percent from their record low in September.
Raymond James also upgraded the operator of the world’s most-popular social network to outperform from market perform, meaning that investors should buy the shares.
Caterpillar Rises
Caterpillar increased 2.6 percent to $98.03 after predicting “better growth” in the second half. The company also said that production will decline this quarter until inventories more closely match demand from customers.
AK Steel fell 3.8 percent to $4.27 and Century Aluminum Co. lost 4.9 percent to $8.43 as Goldman Sachs downgraded the companies to sell from neutral. The brokerage also lowered its recommendation for the U.S. steel industry to cautious, saying the sector is “poised for a correction.”
Furiex Pharmaceuticals Inc. jumped 46 percent to $30.95 after the company and its partner Takeda Pharmaceutical Co. received clearance from the Food and Drug Administration for their Nesina product to treat Type 2 diabetes. Takeda climbed to a four-year high in Tokyo trading today.
To contact the reporters on this story: Sarah Jones in London at sjones35@bloomberg.net; Sarah Pringle in New York at springle1@bloomberg.net
To contact the editors responsible for this story: Andrew Rummer at arummer@bloomberg.net; Lynn Thomasson at lthomasson@bloomberg.net
