The Standard & Poor’s 500 Index declined from near a five-year high as Apple (AAPL) Inc.’s slump amid concern about iPhone sales offset a rally in Dell Inc.
Apple, the most valuable company, sank 3.6 percent on reports it curbed iPhone production on weak demand. Sprint Nextel Corp. dropped 3.9 percent after the wireless carrier was cut at JPMorgan Chase & Co. Dell surged 13 percent as two people with knowledge of the matter said the company is in buyout talks with private-equity firms. Hewlett Packard Co. (HPQ) rose 4.9 percent as market researcher Gartner Inc. said it retook the spot as the top personal-computer maker from Lenovo Group Ltd.
The S&P 500 (SPX) retreated 0.1 percent to 1,470.68 at 4 p.m. New York time. The benchmark gauge for U.S. equities trimmed a decline of as much as 0.4 percent amid Dell’s rally. The Dow Jones Industrial Average advanced 18.89 points, or 0.1 percent, to 13,507.32. About 5.6 billion shares changed hands on U.S. exchanges, or 8.1 percent below the three-month average.
“As Apple goes, so goes the market,” Frank Ingarra, who helps manage $1.4 billion at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said in a phone interview. “The problem you run into is that eventually they run out of people to sell stuff to. There’s just not enough people in the world to keep buying all these Apple products. It makes sense that it’s pulling back, and it makes sense that its effecting the market because it’s such a large weight.”
Almost 80 percent of the 28 S&P 500 companies which reported quarterly results beat analysts forecasts. Fourth-quarter profits at S&P 500 companies grew 2.5 percent, according to analysts’ estimates compiled by Bloomberg. That would be the second-slowest quarterly growth since 2009, the data show.
Consumer staples and industrial shares in the S&P 500 rose today while phone and technology companies slumped. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, rose 1.2 percent to 13.52. The gauge ended last week at the lowest level since 2007.
Apple sank 3.6 percent to $501.75. The Cupertino, California-based company reduced its original target to order 65 million iPhone 5 displays this quarter by about half, Nikkei said, citing an unidentified senior executive at a component maker it didn’t name. IPhone sales are slowing because smartphones have saturated developed markets, where Apple is strongest, said James Cordwell, an analyst at Atlantic Equities Service in London.
Research In Motion Ltd. added 10 percent to $14.95. The maker of the BlackBerry smartphone jumped amid signs that demand for rival Apple’s market-leading iPhone is ebbing.
Sprint Nextel slid 3.9 percent to $5.69. The company was downgraded to neutral from overweight at JPMorgan by equity analyst Philip Cusick. The 12-month share-price estimate is $6.
Scripps Networks Interactive Inc. slid 1.1 percent to $59.15. The television home of Paula Deen’s mashed potatoes was cut to hold from buy at Deutsche Bank AG by equity analyst Douglas Mitchelson. The 12-month share-price estimate is $65.
H&R Block Inc. (HRB) slumped 2.9 percent to $19.41. The biggest U.S. tax preparer was cut to underweight from equalweight at Morgan Stanley.
International Business Machines Corp. dropped 0.9 percent to $192.62. The company was downgraded to neutral from overweight at JPMorgan by equity analyst Mark Moskowitz. The 12-month share-price estimate is $197.
SunPower Corp. slid 6 percent to $7.70. The solar-panel company majority-owned by Total SA (SPWR) fell after an announcement of higher-than-anticipated restructuring costs and a downgrade by Credit Agricole Securities.
Dell surged 13 percent, the most since October 2008, to $12.29. Round Rock, Texas-based Dell is discussing going private with at least two firms, said one of the people, who declined to be identified because the talks are private. The discussions are preliminary and could fall apart because the firms may not be able to line up the needed financing or resolve how to exit the investment in the future, the people said.
“There’s nothing like a good rumor to get the market going in the absence of macro news,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees $20 billion. “We’ve had a pretty decent 2012 in stocks and a good start to this year and people are watching the earnings season.”
Hewlett Packard added 4.9 percent to $16.95. While Lenovo’s sales growth of 8.2 percent from a year earlier was the fastest of the top five computer makers, Hewlett Packard’s dominance in professional PCs helped it retake the lead from Lenovo, market researcher Gartner said in a report today. Hewlett-Packard shipped 16.2 percent of PCs last quarter compared with 15.5 percent a year earlier.
Cisco Systems Inc. (CSCO) gained 2.4 percent to $20.97. The biggest maker of computer networking equipment was raised to outperform at both Robert W. Baird & Co. and William Blair & Co.
Sears Holdings Corp. rose 8.9 percent to $44.60 after Chairman Edward Lampert disclosed that he increased his stake in the retailer last week after being named chief executive officer.
Harry Winston Diamond Corp. jumped 4.3 percent to $15.08, the highest level since April. Swatch Group AG, the biggest maker of Swiss timepieces, agreed to buy the Harry Winston watch and jewelry unit for about $1 billion, adding a luxury label in its biggest acquisition.
Herbalife Ltd. rose 10 percent to $44.08. The shares rallied to the highest price since before hedge-fund manager Bill Ackman called the nutrition company a pyramid scheme and announced he had taken a short position in the shares.
United Parcel Service Inc. climbed 1.7 percent to $79.24. The company said it scrapped a 5.16 billion-euro ($6.9 billion) bid for TNT Express NV after European regulators moved to block the deal. Separately, the stock was raised to market perform from underperform at Avondale Partners LLC.
Starz Class A stock gained 9.8 percent to $15.59. The rival to HBO and Showtime in the premium-cable channel market rose on its first day of trading after being broken off from Liberty Media Corp. (LMCA) in a spinoff. Shares of the Englewood, Colorado-based company traded under the ticker STRZA on the Nasdaq Stock Market.
Volatility will deter investors from moving into stocks from bonds in 2013 even as dividend returns exceed fixed-income yields, according to Goldman Sachs Group Inc.’s U.S. equity strategist.
“It’s the drawdown risk that is inhibiting investors from reducing bond holdings and increasing equity holdings,” David Kostin said at a presentation in London today. “You need to have more stable markets. I do not anticipate flows into equities from bonds. It should happen; it won’t happen this year.”
The forecast is at odds with Goldman Sachs Asset Management Chairman Jim O’Neill’s comment this year that funds may see a “great rotation” into equities. Investor deposits into global equity mutual funds in the first week of January were higher than any other period except one, a sign they may be returning to stocks after withdrawing cash for the past six years, according to data from EPFR Global.
The S&P 500 ended last year with a dividend yield that was 56 basis points, or 0.56 percentage points, higher than the yield on the benchmark 10-year Treasury, according to Bloomberg data. The spread reached a record weekly high of 1.16 percentage points in 2009 in favor of equities.
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