Most U.S. Stocks Retreat as Investors Await Fed, Congressional Elections
Oct. 29 (Bloomberg) -- Bloomberg's Courtney Donohoe reports on the performance of the U.S. equity market today. Most U.S. stocks rose, with the Standard & Poor’s 500 Index completing its second straight monthly advance, as Microsoft Corp. beat profit estimates and economic growth matched forecasts. Bloomberg's Pimm Fox also speaks. (Source: Bloomberg)
Oct. 29 (Bloomberg) -- Barton Biggs, co-founder of Traxis Partners LP, discusses the potential implications of Federal Reserve quantitative easing for stocks and the prospects of a bubble in emerging markets. Biggs, speaking with Betty Liu on Bloomberg Television’s “In the Loop,” also discusses his investment strategy. (Source: Bloomberg)
Oct. 28 (Bloomberg) -- Rick Bensignor, chief market strategist at Execution Noble Ltd., talks about the possible impact of another round of Federal Reserve quantitative easing on the U.S. economy. Bensignor also discusses the outlook for U.S. stocks and offers his advice for investors. He talks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Most U.S. stocks fell this week and the Standard & Poor’s 500 Index completed its second straight monthly gain as investors awaited congressional elections and the Federal Reserve’s plans for economic stimulus.
3M Co. dropped 6.9 percent, the most in the Dow Jones Industrial Average, after the maker of Scotch tape and electronic signs cut its 2010 profit forecast. Measures of industrial companies and utilities in the S&P 500 lost at least 0.6 percent, the most among 10 groups. Microsoft Corp. advanced 5.1 percent after the software maker beat earnings projections, joining 75 percent of S&P 500 companies that have done so.
Among S&P 500 companies, 256 declined and 244 advanced this week. The index gained less than 0.1 percent to 1,183.26. The Dow slid 14.07 points, or 0.1 percent, to 11,118.49.
“Most investors were focused on what’s going to happen next week and, as a result, the markets have kind of treaded water,” said David Joy, chief market strategist at Columbia Management in Boston, which oversees $347 billion. “That has dominated investors.”
The S&P 500 rose 3.4 percent in October after surging 7.5 percent last month, the best September since 1939. Fed policy makers meet Nov. 2-3 to consider steps to boost an economy growing too slowly to reduce unemployment near a 26-year high. The central bank has asked bond dealers and investors for projections of central bank asset purchases over the next six months as it seeks to gauge the possible impact of new efforts to spur growth.
Online Bets
Chances that Republicans will win control of the U.S. House on Nov. 2 rose to a record 93.9 percent yesterday, according to bets placed on Intrade, a Dublin-based online prediction market. Democrats retaining leadership of the Senate was about 55 percent likely, Intrade data show.
“If Republicans were to capture the Senate as well, that would come as a positive surprise to the market,” Joy said.
U.S. companies are poised to report the fourth straight quarterly earnings increase. More than 70 percent of S&P 500 companies have topped the average profit estimate for six straight quarters, the longest streak in Bloomberg data going back to 1993.
3M fell 6.9 percent to $84.22. The company cut its 2010 profit forecast because of acquisitions announced during the quarter and said pension expenses will be higher next year.
The total pension deficit at S&P 500 companies including 3M is a record $380 billion, David Bianco, head of U.S. equity strategy at Bank of America Corp., wrote in a report sent to clients yesterday.
Corporate Purchases
Microsoft gained 5.1 percent to $26.67. The world’s largest software maker reported a 51 percent gain in first-quarter profit, topping analysts’ predictions, as corporate customers stepped up purchases of computers and programs that run on them.
Merck & Co. slid 2.1 percent to $36.31. The second-largest U.S. drugmaker set aside $950 million to resolve a criminal probe into the Vioxx painkiller it withdrew six years ago, raising potential legal costs to $7.7 billion. The legal reserve contributed to a 90 percent decline in third-quarter income to $342 million.
Chevron Corp. fell 2.3 percent to $82.60. The second- biggest U.S. energy company posted an unexpected drop in net income, bucking the trend of bigger profits among the largest oil companies, after costs from exploration failures erased gains from higher crude prices and record production.
Rebranding
American Express Co. rose 6.2 percent to $41.46. The biggest U.S. credit-card issuer by purchases hired former executives of Sprint Nextel Corp. to bolster its online and mobile unit and is rebranding Revolution Money, an Internet- based payments network.
Monster Worldwide Inc. surged 28 percent, the most in a week since October 2008, to $18.06 for the biggest gain in the S&P 500. The world’s largest online-recruiting company reported third-quarter results that beat analysts’ estimates and boosting a forecast.
Eastman Kodak Co. jumped 20 percent to $4.70. The camera maker said it will report up to $7.7 billion in sales this year, compared with the average analyst estimate of $7.26 billion.
Coach Inc. climbed 12 percent to $50. The largest U.S. maker of luxury leather handbags reported a 34 percent increase in first-quarter profit after luring more shoppers to its stores.
The U.S. economy expanded at a 2 percent annual rate in the third quarter and inflation cooled, underscoring the views of Federal Reserve policy makers who say more stimulus will be needed to spur growth. The report, which matched the median economist estimate, was released yesterday by the Commerce Department.
To contact the reporter on this story: Tara Lachapelle in New York at tlachapelle@bloomberg.net.
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.
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