The Standard & Poor’s 500 Index (SPX) erased gains in the final hour of trading as a rally in bank and industrial shares wasn’t enough to overcome disappointing results at Apple (AAPL) Inc. and an unexpected drop in new home sales.
A gauge of homebuilders in S&P indexes slumped 3.2 percent. Apple tumbled 4.3 percent as iPhone sales missed forecasts. Netflix Inc. (NFLX), the largest video-subscription service, plunged 25 percent after raising doubts on user growth. JPMorgan Chase & Co. (JPM) and Citigroup Inc. rose at least 1.2 percent. Boeing Co. (BA) and Caterpillar Inc. (CAT) added more than 1.4 percent, pacing gains in industrial shares, after raising their earnings forecasts.
About five stocks rose for every four falling on U.S. exchanges at 4 p.m. New York time. The S&P 500 slid less than 0.1 percent to 1,337.89, after gaining 0.4 percent earlier. The benchmark gauge has lost 2.8 percent in four days. The Dow Jones Industrial Average rose 58.73 points, or 0.5 percent, to 12,676.05. Volume for exchange-listed stocks in the U.S. was 6.6 billion shares, or about in line with the three-month average.
“There’s a huge amount of uncertainty out there,” Rob McIver, co-portfolio manager at Jensen Investment Management in Lake Oswego, Oregon said in a phone interview. His firm manages $5.5 billion. “It’s a somewhat anemic U.S. recovery. And you see that starting to be reflected in corporate results. It’s certainly a difficult environment for investors.”
The S&P 500 fell as a report showed demand for new U.S. homes unexpectedly dropped in June from a two-year high. Sales at only 40 percent of the 201 S&P 500 companies which reported second-quarter results have beaten analysts’ estimates, according to data compiled by Bloomberg. Earnings at 71 percent of companies topped forecasts, the data showed.
“The earnings news is mixed,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. “Still, companies have managed expectations and, for the most part, the numbers came in ahead of forecasts. We’re also seeing a discussion on the Fed potentially acting amid an economic slowdown.”
Worse-than-expected economic data intensified bets that the Federal Reserve is moving closer to taking new steps to spur economic growth. Fed Chairman Ben S. Bernanke last week said policy makers are studying options for further easing that could be deployed in case economic growth remains too feeble to produce a lasting decline in unemployment. The Federal Open Market Committee meets next week.
Technology shares, which comprise 20 percent of the S&P 500, dropped 0.8 percent.
Apple sank 4.3 percent, the most since October, to $574.97. Customers delayed purchases of existing iPhone versions while awaiting the next model. Samsung Electronics Co. releases several designs a year to defend its lead in the $219.1 billion smartphone market. That raises the stakes for Apple Chief Executive Officer Tim Cook, who relies on a once-a-year upgrade of the device that makes up half of the company’s sales.
“Pressure is mounting,” said Michael Obuchowski, a portfolio manager at North Shore Asset Management LLC, an owner of Apple shares. “Because everybody else has a much faster design cycle, Apple has to come up with a new phone that’s competitive not just when it comes out, but will stay competitive for a long period of time.”
Netflix plunged 25 percent to $60.28, the lowest since January 2010. The summer Olympics are likely to hamper efforts to sign up new customers, Chief Executive Officer Reed Hastings said. The full year-goal of adding 7 million new U.S. users will be “challenging” if this quarter’s most optimistic targets aren’t met, he said.
International Game Technology (IGT) dropped 20 percent to $11.76. The world’s biggest maker of slot machines reported profit and sales that trailed analysts’ forecasts.
TripAdvisor Inc. (TRIP) sank 17 percent to $36.18. The online travel-recommendation service spun off from Expedia Inc. reported second-quarter revenue that missed analysts’ estimates.
WellPoint Inc. (WLP) lost 12 percent to $54.01. The second- biggest U.S. health plan cut its forecast after quarterly profit missed analyst estimates because of higher medical costs.
ConocoPhillips (COP) lost 2.6 percent to $53.24. The company said second-quarter profit fell 33 percent for the newly independent oil and natural-gas producer after losing income from its refining segment, which was spun off April 30.
Corning Inc. (GLW) retreated 7.7 percent to $11.14. The world’s largest maker of glass for flat-panel televisions reported a 39 percent drop in second-quarter earnings amid price declines for its LCD screens.
A measure of financial shares in the S&P 500 gained 0.3 percent. JPMorgan added 1.3 percent to $35.17. Citigroup (C) rose 2.2 percent to $25.79.
Nasdaq OMX Group Inc. (NDAQ) jumped 4.8 percent, the most since November, to $22.87. The second-largest U.S. equity exchange operator reported earnings that beat analyst estimates. The company lowered its 2012 expense forecast.
Boeing gained 2.8 percent to $74.03. Total jet deliveries should rise to a range of 585 to 600 this year, it said. That may help the U.S. planemaker reclaim the top spot in commercial production it lost to European rival Airbus SAS in 2003.
Caterpillar rallied 1.4 percent to $82.60. The largest maker of construction and mining equipment raised its full-year earnings forecast as increasing demand from North American builders and overseas miners bucks an economic slowdown.
Symantec Corp. (SYMC) soared 14 percent to $14.96. The world’s largest maker of computer-security software ousted Chief Executive Officer Enrique Salem and passed the reins to Chairman Steve Bennett, saying the company wasn’t performing well enough.
Altera Corp. (ALTR) surged 12 percent to $34.41. The maker of programmable chips forecast sales that may beat analysts’ estimates this quarter on stronger demand for wireless- communications gear.
Juniper Networks Inc. (JNPR) climbed 11 percent to $16.50. The No. 2 maker of networking gear reported second-quarter revenue and profit that beat analysts’ estimates, citing demand for new products and improved sales to U.S. telecommunications carriers.
Broadcom Corp. (BRCM) added 7.2 percent to $32.98. The maker of chips that help mobile devices connect to the Internet, forecast third-quarter sales that may exceed some analysts’ estimates, helped by strong demand from its smartphone customers.
Baxter International Inc. (BAX) surged 3.4 percent to $56.83. The maker of blood products and intravenous drugs raised its dividend and said it authorized a new share buyback program.
U.S. initial public offerings are set for their busiest week since March as purveyors of steak, burritos and antivirus software strive to go to market before investor optimism wears off.
Del Frisco’s Restaurant Group Inc. (DFRG), Chuy’s Holdings Inc., Avast Software NV and five other companies are attempting to raise as much as $923 million, data compiled by Bloomberg show. That would be the most since the week of March 26, when nine companies went public, including foodmaker Annie’s Inc. and industrial-components maker Rexnord Corp.
The IPOs come on the heels of sales last week by Palo Alto Networks Inc. (PANW), Kayak Software Corp. (KYAK) and teen retailer Five Below Inc. (FIVE), which surged on their first trading days. Tex-Mex restaurant chain Chuy’s raised $75.8 million on July 23 and jumped 16 percent in its debut, giving further impetus to this week’s sellers even as concerns persist over Europe’s debt crisis and the economic recovery in the U.S., said James Investment Research Inc.’s Tom Mangan.
“There’s nothing like someone else’s success to encourage you to take that leap as well,” said Mangan, who helps oversee $3.4 billion at the Xenia, Ohio-based firm. “There’s some urgency on the part of people who want to proceed with an IPO because they’re afraid of what might happen later in the year.”
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