U.S. Stocks Fluctuate as Retail Sales, Housing Data Present Mixed Picture

U.S. stocks drifted between gains and losses as data on retail sales, consumer confidence and home prices presented a mixed picture of the outlook for the world’s largest economy.

General Motors Co. rose 2.8 percent after at least seven firms including JPMorgan Chase & Co. and Morgan Stanley initiated coverage of the automaker with a positive view. American Express Co., Caterpillar Inc. and Walt Disney Co. lost at least 0.6 percent to lead declines in the Dow Jones Industrial Average. Homebuilders retreated as home prices dropped more than forecast in October.

The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,258.09 at 1:20 p.m. in New York and is up 6.6 percent this month, poised for its best December since 1991. The Dow rose 18.39 points, or 0.2 percent, to 11,573.42.

“The two numbers we’ve seen today have been disappointing,” said Philadelphia Trust Co.’s Chief Investment Officer Richard Sichel, referring to the consumer and home price data. “But the consumer is spending anyway and fundamentals always drive the market a little less at the end of the year as some people take losses and others take gains for various reasons,” said Sichel, who helps manage $1.5 billion.

The Conference Board’s consumer confidence index decreased to 52.5, lower than the most pessimistic forecast of economists surveyed by Bloomberg News and down from a revised 54.3 in November. U.S. retail sales, excluding autos, rose 5.5 percent to $584 billion from Nov. 5 through Dec. 24 for the biggest holiday-season increase since 2005, according to MasterCard Advisors’ SpendingPulse, which measures retail sales by all payment forms.

Homebuilders Slump

Homebuilders fell after the S&P/Case-Shiller index of property values decreased 0.8 percent from October 2009, the biggest year-over-year decline since December 2009. The drop exceeded the 0.2 percent drop projected by the median forecast of economists surveyed by Bloomberg News.

PulteGroup Inc. slipped 2.3 percent to $7.32, Lennar Corp. declined 1.2 percent to $18.36 and D.R. Horton Inc. tumbled 2.6 percent to $11.84 as an index of 12 homebuilders in S&P indexes lost 1.5 percent.

General Motors rose 2.8 percent to $35.57. The automaker was rated “overweight” in new coverage at JPMorgan, Barclays Plc and Morgan Stanley. GM was rated “outperform” at Credit Suisse Group AG and RBC Capital Markets, which also initiated coverage of the stock. Citigroup Inc. and Bank of America Corp. have a new “buy” recommendation for GM.

Short Sales Subside

Short selling of shares of S&P 500 companies fell to a one- year low as traders slashed bets that phone and consumer discretionary stocks, including Qwest Communications Inc. and Abercrombie & Fitch Co., will retreat, according to data compiled by U.S. exchanges and Bloomberg.

Short interest on the benchmark U.S. equity index dropped to 7.29 billion shares, or 4.15 percent of shares available for trading, as of Dec. 15, down 2.9 percent from two weeks earlier, For phone companies, it slid 12 percent to 440.9 million, and fell 8.7 percent to 1.2 billion shares for consumer discretionary stocks.

Caterpillar, the world’s biggest maker of construction equipment, lost 0.6 percent to $93.48 while Disney, the world’s biggest media company, retreated 0.6 percent to $37.28. American Express declined 0.9 percent to $42.64.

Hasbro Inc., the world’s second-largest toymaker, fell 2.1 percent to $47.51.

Energy and commodity companies led gains among 10 groups in the S&P 500, while consumer and industrial shares had the biggest declines. About 468 million shares changed hands on the NYSE yesterday, the fewest for a full-day session since May 1998, as trading slowed following a snowstorm. New York commuters and travelers face further disruptions today as winds hinder efforts to clear roads and runways following the heaviest December snows in six decades.

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net.

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

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