U.S. Stocks Fluctuate as Earnings Offset Currency Concerns

U.S. stocks swung between gains and losses as the Standard & Poor’s 500 Index headed for its third straight weekly gain amid improving corporate earnings, which helped offset uncertainty about global currency markets.

Schlumberger Ltd., the oilfield services provider, jumped 4.8 percent as profit more than doubled. T. Rowe Price Group Inc. rose 4.4 percent as the asset manager reported earnings that beat analysts’ forecasts. Verizon Communications Inc. fell 1.6 percent as new monthly wireless contracts trailed some estimates. American Express Co. slid 2.8 percent after saying it remains “cautious” about its outlook for the economy.

Seven stocks gained for every six that fell on U.S. exchanges. The Standard & Poor’s 500 Index added 0.1 percent to 1,181.67 at 3:11 p.m. in New York. The Dow Jones Industrial Average slipped 28.54 points, or 0.3 percent, to 11,118.03.

“On the currency front, there’s nervousness about capital controls in emerging markets,” said Russ Koesterich, the San Francisco-based head of investment strategy for scientific active equities at BlackRock Inc., which oversees $3.45 trillion as the world’s largest asset manager. “In addition to that, you’ve had this huge move from the lows. You’ve already discounted a lot of what’s likely to happen in terms of quantitative easing and corporate earnings. We need more catalysts at this point.”

The S&P 500 has risen as much as 16 percent from this year’s low in July on better-than-expected corporate earnings and expectations that the Federal Reserve will buy bonds to stimulate the economy, a tactic known as quantitative easing.

Earnings Season

Of the 132 companies in the S&P 500 that reported results since Oct. 7, more than 85 percent have topped analysts’ per- share earnings estimates, according to data compiled by Bloomberg. Analysts surveyed by Bloomberg predict 26 percent growth in third-quarter profit from a year earlier for S&P 500 companies, the fourth straight quarterly increase.

Concern about the path of the U.S. dollar as the G-20 talks conclude today weighed on the equity market, according to Frank Ingarra, a Stamford, Connecticut-based money manager at Hennessy Advisors Inc.

“It’s a wait-and-see attitude,” said Ingarra, who helps oversee about $900 million. “People are concerned about what will come out of the G-20 meeting. We are seeing companies beating estimates. However, there’s a lot of that baked into prices. Also, we’ve had a big run-up in stocks and we’d need bigger catalysts for a rally.”

G-20 finance ministers and central bankers are meeting in Gyeongju, South Korea, after weeks of accusations that countries from the U.S. to China risk sparking a trade war by relying on weaker exchange rates to spur economic growth.

Dollar

The dollar was headed for its first weekly advance in six weeks versus currencies including the euro and yen as Treasury Secretary Timothy F. Geithner suggested that G-20 members set targets for reducing trade deficits.

The Dollar Index, which IntercontinentalExchange Inc. uses to track the dollar against the currencies of six major U.S. trading partners, has increased 0.6 percent since Oct. 15 in its first weekly gain since rising 0.7 percent during the five days ended Sept. 10.

Federal Reserve policy makers are improvising as they debate embarking on a second round of unconventional monetary stimulus, said Alan Blinder, former vice chairman of the U.S. central bank.

“They are making it up as they go along,” Blinder, a Princeton University economist, said in an interview with Bloomberg television’s “Surveillance Midday” with Tom Keene.

Earnings

U.S. stocks rose for a second day yesterday as higher-than- estimated earnings from EBay Inc. to McDonald’s Corp. and a drop in jobless claims helped offset a slump in financial companies amid speculation that banks face more losses from bad mortgages.

“Earnings are coming in well,” said Michael Mullaney, who helps manage $9.5 billion at Fiduciary Trust Co. in Boston. “In addition to that, there’s a lot of cash on the sidelines. We’re muddling through. Even as we get a technical pullback, I still see the market strong by year end.

Schlumberger jumped 4.8 percent to $67.39. Profit more than doubled to $1.7 billion as an increase in onshore drilling in the U.S. and Canada offset a slowdown in the Gulf of Mexico as a result of the moratorium following the BP Plc spill.

T. Rowe Price gained 4.4 percent to $55. The asset manager that hasn’t lost money since going public in 1986 said third- quarter earnings climbed 27 percent, driven by rising markets and growth in its retirement-related funds. The 64 cents- a- share profit exceeded the average estimate by 4 cents.

Verizon, American Express

Verizon lost 1.6 percent to $31.99. The company added 584,000 new wireless customers on monthly contracts. That fell short of the 625,000 that analyst Tim Horan at Oppenheimer & Co. had forecast. Simon Flannery, an analyst at Morgan Stanley, estimated 665,000.

American Express slid 2.8 percent to $39.15, the biggest decline in the Dow.

Riverbed Technology Inc. soared 19 percent to $54.53. The maker of computer backup and networking equipment reported third-quarter adjusted earnings of 34 cents a share, beating the 28-cent average analyst estimate. The company was raised to “outperform” from “neutral” at Wedbush Securities Inc.

Caterpillar Inc. dropped 0.9 percent to $78.22. The world’s largest maker of construction and mining equipment agreed to buy MWM Holding GmbH from 3i Group Plc. Caterpillar will purchase the Mannheim, Germany-based manufacturer of combustion engines for 580 million euros ($806 million), the Peoria, Illinois-based company and London-based 3i said today in a joint statement.

Separately, the stock was cut to “market perform” from “outperform” at Raymond James Financial Inc.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net;

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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