Inside Financial Markets

U.S. Stocks Little Changed Amid Data Before Fed Speech

US stocksU.S. Stocks Little Changed Amid Data Before Fed Speech

U.S. stocks were little changed, after the Standard & Poor’s 500 Index climbed to a record high last week, as data showed service industries grew at a faster pace and investors awaited a Federal Reserve official’s speech.

Qualcomm Inc. (QCOM) dropped 1.5 percent as Piper Jaffray Cos. cut its rating on the company. Berkshire Hathaway Inc. (BRK/A) climbed 0.5 percent after posting second-quarter earnings that exceeded analysts’ projections. Tyson Foods Inc. rose 3.8 percent after reporting third-quarter results that beat estimates.

The S&P 500 (SPX) slipped 0.1 percent to 1,708.54 at 10:52 a.m. in New York. The Dow Jones Industrial Average lost 31.43 points, or 0.2 percent, to 15,626.93. Trading in S&P 500 stocks was 33 percent below the 30-day average during this time of day.

“The market has put on such a powerful move this year that regardless of the numbers that come out we’re due for some type of pullback, even if it’s brief in duration and mild in severity,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. His firm oversees $363.8 billion.

Stocks rallied 1.1 percent last week, sending the S&P 500 above 1,700 for the first time, as central banks vowed to maintain stimulus and data showed economic growth beat projections in the second quarter. The S&P 500 has advanced 20 percent this year and is trading at 15.5 times estimated earnings, compared with an average of 13.9 over the last five years, data compiled by Bloomberg showed.

Fed’s Fisher

Fed Bank of Dallas President Richard Fisher will give a speech on the U.S. economy to the National Association of State Retirement Administrators’ conference in Portland, Oregon, at 11:45 a.m. New York time.

The Fed said last week persistently low inflation could hamper the economy and pledged to keep buying $85 billion in bonds every month.

Central bank policy makers have been debating the pace and timing of any cuts in the monetary stimulus that has helped propel the S&P 500 up more than 150 percent from its bear-market low in 2009. Tapering of the pace of asset purchases may begin in September, according to a growing number of economists surveyed by Bloomberg from July 18 to July 22.

The Institute for Supply Management’s non-manufacturing index increased to 56 in July from 52.2 the prior month, a report from the Tempe, Arizona-based group showed today. The median forecast in a Bloomberg survey of economists called for a gain to 53.1. Readings higher than 50 indicate growth in the industries that make up almost 90 percent of the economy.

Earnings Scorecard

Better-than-expected corporate earnings have also bolstered stocks in recent weeks. Of the 391 companies in the S&P 500 that have reported results for the second quarter, 74 percent have surpassed forecasts, according to data compiled by Bloomberg. Analysts projected companies on the gauge will increase their third-quarter earnings per share by 3.3 percent from a year earlier, and their profit in the fourth quarter by 9.9 percent, according to estimates compiled by Bloomberg.

Six out of 10 main industries in the S&P 500 fell today, with utility and energy shares losing at least 0.4 percent to lead declines.

The Chicago Board Options Exchange Volatility Index (VIX), or VIX, rose 0.9 percent today to 12.09. The equity volatility gauge reached its 2013 peak in June and has since fallen 41 percent.

Qualcomm Rating

Qualcomm dropped 1.5 percent to $65.76 today. Piper Jaffray cut its rating on the largest seller of semiconductors for mobile phones to neutral from overweight, meaning that investors should not buy more of the shares. The brokerage cited weaker demand for the parts used in the most expensive smartphones.

Fossil Group Inc. lost 3.8 percent to $110. The fashion accessories designer declined after an analyst with Barclays Plc downgraded the shares to underweight from equalweight.

Fastenal Co. fell 2.4 percent to $49.06 after saying daily sales growth slowed to 2.9 percent last month. Holding the July 4 public holiday on a Thursday contributed to weak sales on July 5, the seller of nuts and bolts said in a statement.

Berkshire Hathaway’s Class B shares rose 0.5 percent to $118.38. Net income climbed to $4.54 billion, or $2,763 a share, from $3.11 billion, or $1,882, a year earlier, the Omaha, Nebraska-based company said late on Aug. 2. Operating earnings, which exclude some investment results, were $2,384 per A share, beating the $2,166 average estimate of three analysts surveyed by Bloomberg.

Tyson jumped 3.8 percent to $29.59. The largest U.S. beef producer reported record profit from its chicken unit and wider margins in the beef business.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)