BLBG: U.S. Stocks Fluctuate Before Apple Report as Biotech Shares Fall
U.S. stocks fluctuated as declines in biotechnology companies offset gains in technology shares before Apple Inc. results and a rally in commodities stocks.
Apple gained 1.8 percent. Freeport McMoRan Inc. and DuPont Co. rose more than 3.9 percent. Mylan NV fell 4.3 percent after rejecting Teva Pharmaceutical Industries Ltd.’s $40 billion takeover offer. The Nasdaq Biotechnology Index lost 3 percent. Applied Materials Inc. sank 7.4 percent after dropping its takeover bid for Tokyo Electron Ltd.
The Standard & Poor’s 500 Index added 0.1 percent to 2,118.66 at 11:59 a.m. in New York, after earlier rising as much as 0.4 percent. The Dow Jones Industrial Average climbed 33.80 points, or 0.2 percent, to 18,113.94. The Nasdaq Composite Index slipped 0.1 percent.
“Traders are cautiously optimistic that a good report from Apple and other tech names can continue to drive the Nasdaq further,” said Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc. “If that happens, we’re probably going to take the rest of the market to new highs.”
The Nasdaq Composite Index topped its dot-com-era high last week, extending a record on Friday, and the S&P 500 closed at an all-time high as Google Inc., Microsoft Corp. and Amazon.com Inc. rallied after posting financial results. Unlike the dot-com era, today’s gains are built on earnings that have almost tripled in the past decade and a half, driven by demand for products such as Apple’s iPhone and Google Inc.’s web ads.
Earnings Season
Pfizer Inc., Exxon Mobil Corp. and Ford Motor Co. are among companies reporting quarterly results this week. While analysts predict a profit slump through September, they have moderated how steep that will be. They now forecast first-quarter earnings for S&P 500 companies will drop 2.9 percent, better than April 10 estimates for a 5.6 percent decline.
Of the S&P 500 members that have already released results this season, 77 percent beat profit projections and 50 percent topped sales estimates.
Investors are also awaiting the outcome of the Federal Reserve’s two-day meeting, which begins tomorrow, for more hints on the timing of interest rate increases. None of the 43 economists in a Bloomberg poll expects the U.S. central bank to lift borrowing costs this week.
Fed Meeting
Boston Fed President Eric Rosengren said this month the U.S. economy isn’t ready for a rate increase. Fed Chair Janet Yellen and her colleagues last month opened the door to an increase as soon as June, while also suggesting in forecasts that September may be more likely.
Economic data have been mixed, with the March jobs report showing new hires fell below 200,000 for the first time in more than a year, and capital-goods orders showed a surprise drop last month. Meanwhile, weekly jobless claims are near the lowest levels in almost 15 years, and gross domestic product is set to grow by 2.8 percent this year, the most since 2005, according to economists surveyed by Bloomberg.
The Chicago Board Options Exchange Volatility Index advanced 2.4 percent Monday to 12.58. The gauge, known as the VIX, fell almost 12 percent last week to its lowest level in almost five months.
Seven of the S&P 500’s 10 main groups rose, led by raw-material companies’ 1.2 percent gain as futures on gold, copper and silver rallied. Freeport-McMoRan jumped 4.6 percent to a two-month high. Newmont Mining Corp. rose 3.8 percent also near a two-month high.
