U.S. Stocks Erase Early Losses as Retailers, Carmakers Advance

U.S. stocks erased an early loss to finish little changed, leaving the Dow Jones Industrial Average at the highest level since July, as improving sales at retailers and carmakers helped offset lower-than-forecast factory orders.

Ford Motor Co. (F) rose 1.5 percent after carmakers reported December sales that beat analysts’ estimates, capping the industry’s best year since 2008. Home Depot Inc. (HD), Lowe’s Cos. and Starbucks Corp. advanced at least 1.4 percent after the International Council of Shopping Centers increased its estimate for December retail-sales growth. Yahoo! Inc. (YHOO) lost 3.1 percent after appointing Scott Thompson chief executive officer.

The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,277.30 at 4 p.m. New York time, after dropping as much as 0.7 percent earlier. The benchmark index is at its highest level since Oct. 28. The Dow added 21.04 points, or 0.2 percent, to 12,418.42 today.

“We started the day with a bit of a pullback from yesterday’s strong rise, and then the data that we got this morning helps the market and firms up the conviction that the U.S. economy is doing well,” Giri Cherukuri, head trader for Oakbrook Investments, which manages $2.7 billion in Lisle, Illinois, said in a telephone interview.

The S&P 500 lost (SPX) 0.04 point to 1,257.60 in 2011, the smallest annual change since 1947. The benchmark gauge for U.S. equities surged 14 percent from last year’s lowest level on Oct. 3 through Dec. 30 as better-than-estimated economic data fueled optimism the world’s largest economy can shrug off concern over Europe’s sovereign-debt crisis. Stocks rallied yesterday, sending the Dow to the highest level since July 26, amid signs that manufacturing output is increasing from China to Australia and America.

Factory Goods

U.S. equities fell earlier today as bookings for factory goods (TMNOCHNG) rose 1.8 percent after a revised 0.2 percent drop the prior month, data from the Commerce Department showed today in Washington. Economists in a Bloomberg survey had estimated a 2 percent increase, according to the median forecast.

Global stocks also declined as UniCredit SpA, Italy’s largest bank, said it will sell new shares in a 7.5 billion-euro ($9.8 billion) offer to strengthen its capital position. The rights offer boosted concern that lenders may struggle to raise more capital to weather the region’s debt crisis. The European Central Bank reported overnight deposits from financial institutions rose to an all-time high and Luxembourg Prime Minister Jean-Claude Juncker said the European Union is facing a recession of unknown scope.

Retail Sales

Stocks of companies that rely on consumer discretionary spending had the biggest gain (S5COND) among S&P 500 industries, rising 0.7 percent as a group.

Retail sales at stores open more than a year may have gained as much as 4.5 percent in December, more than previously estimated, as U.S. shoppers pursued holiday discounts, the International Council of Shopping Centers said in a statement today. Same-store sales in December were earlier projected to have advanced as much as 4 percent, the trade group said.

Home Depot rallied 1.4 percent to $42.74. Lowe’s added 3.7 percent to $26.47, while Starbucks (SBUX) advanced 2 percent to $46.17. Ralph Lauren Corp. gained 4.2 percent to $142.88, Coach Inc. (COH) rose 2.6 percent to $61.59 and Urban Outfitters Inc. (URBN) increased 2.4 percent to $28.41.

Ford gained 1.5 percent to $11.30. The second-biggest U.S. automaker said total company sales in December increased 10 percent, the best since 2005, beating analysts’ estimate of 7.7 percent, and sales in the U.S. increased 17 percent in 2011.

Patent Lawsuit

TiVo Inc. (TIVO) rallied 10 percent to $9.82. The Dallas-based company settled a patent lawsuit over digital video recorders with AT&T Inc., which agreed to pay at least $215 million. TiVo, a pioneer in the market for set-top boxes that can record a TV program and play it back at the same time, had lost customers to offerings from TV-service providers including AT&T. TiVo accused those companies of using its patented time-warp technology.

Netflix Inc. (NFLX) advanced 11 percent, the most in the S&P 500, to $80.45. The company said users of its online movie and TV- streaming service watched more than 2 billion hours of content in the fourth quarter, exceeding the 1.2 billion-hour estimate of Richard Greenfield, an analyst with BTIG Research.

Yahoo dropped 3.1 percent to $15.78. The Internet company appointed Thompson, former president of EBay Inc. (EBAY)’s PayPal, as CEO four months after firing Carol Bartz for failing to drive a turnaround.

Considered Options

Yahoo has considered options including divestitures, and drew interest from multiple parties, according to a memo to employees in September. Chairman Roy Bostock said on a conference call that he has no plans to take Yahoo private. EBay tumbled 3.8 percent to $30.16.

Shares of financial companies declined 0.5 percent as a group in the S&P 500, trimming a steeper drop of as much as 1.6 percent. Bank of America Corp. (BAC) reversed losses, rising 0.2 percent to $5.81 after dropping as much as 3.1 percent earlier. JPMorgan Chase & Co. (JPM) gained 0.6 percent to $34.95 after falling 1.2 percent.

Eastman Kodak Co. (EK) tumbled 28 percent to 47 cents. The imaging company that lost 88 percent of its market value last year may file for bankruptcy protection this month or early February if it can’t sell digital patents, the Wall Street Journal reported today, citing people familiar with the matter.

To contact the reporters on this story: Ksenia Galouchko in New York at kgalouchko1@bloomberg.net; 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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