U.S. Stocks Fluctuate After Weekly Decline Amid Japan GDP

U.S. stocks fell, giving the Standard & Poor’s 500 Index its fifth drop in six sessions, as data showed a slowdown in Japan’s economic growth and investors awaited tomorrow’s report on America’s retail sales.

Tesla Motors Inc. declined 3.7 percent as Lazard Capital Markets LLC downgraded the carmaker’s shares. Sysco Corp. fell 5.8 percent after results missed analysts’ estimates. Apple Inc. advanced 2.8 percent after winning a patent-infringement battle against Samsung Electronics Co. BlackBerry (BBRY) Ltd. rallied 10 percent as the company’s board said it is exploring alternatives, including a possible sale.

The S&P 500 (SPX) fell 0.1 percent to 1,689.47 at 4 p.m. in New York, extending its loss from a record high to 1.2 percent. The Dow Jones Industrial Average declined 5.83 points, or less than 0.1 percent, to 15,419.68. About 5 billion shares changed hands on U.S. exchanges, 20 percent below the three-month average.

“We have growth frustratingly low offset by discount rates that are unnaturally low,” Joe Costigan, director of equity research at Bryn Mawr Trust Co. in Bryn Mawr, Pennsylvania, said in a phone interview. His firm oversees $6.7 billion. “As long as that’s the case, the market will stay locked at least into September and you’ll see days like this with low volume and really not a lot of conviction.”

The S&P 500 declined 1.1 percent last week, its biggest drop in seven weeks, and the Dow dropped 1.5 percent in the period, snapping a string of six weekly advances, amid growing speculation the Federal Reserve will pare bond purchases this year as the economy strengthens.

S&P Rally

The S&P 500 has rallied 18 percent so far in 2013 and closed at a record 1,709.67 on Aug. 2. The index is trading at 15.3 times projected earnings, up from 13.1 times on the first trading day of this year. That compares with a five-year average of 13.9 times, data compiled by Bloomberg show.

Better-than-estimated corporate earnings and central bank stimulus, including record-low borrowing rates, have helped equities rally, with the S&P 500 surging more than 150 percent from its bear-market low in 2009.

Of the 450 companies in the S&P 500 that have reported quarterly results this period, 72 percent have exceeded analysts’ profit estimates, with earnings rising 2.8 percent, data compiled by Bloomberg show.

“We’ve seen a rally with a multiple expansion and not necessarily earnings growth,” Jeff Schwarte, a money manager who helps oversee about $290 billion in Des Moines, Iowa, at Principal Global Investors, said by phone. “We need to see earnings, we need to see some resolution on tapering.”

Economic Data

Investors have been scrutinizing economic data to determine whether growth is strong enough for the Fed to curtail its monthly bond buying. A Commerce Department report tomorrow will show that retail sales rose for a fourth consecutive month in July, economists surveyed by Bloomberg predicted. A Fed release on Aug. 15 may show factories, mines and utilities increased their output in July. On Aug. 16, reports will probably show that housing starts and building permits rebounded last month.

In Asia, government reports showed Japan’s gross domestic product growth slowed from the first quarter to a pace below economists’ forecasts while Chinese factor production increased a higher-than-expected 9.7 percent in July.

Stock swings have narrowed. The S&P 500’s average intraday price changes averaged about 0.7 percent over the past 30 days, the smallest fluctuation since a comparable period ended Feb. 21, data compiled by Bloomberg.

The Chicago Board Options Exchange Volatility Index, or VIX, retreated 4.5 percent to 12.81. The equity volatility gauge reached its 2013 peak in June and has since dropped 37 percent.

Weighing Penalties

Seven of 10 main groups in the S&P 500 fell today, with utility and energy stocks sinking at least 0.5 percent to lead the retreat.

JPMorgan Chase & Co. lost 0.8 percent to $54.09, the stock’s seventh straight decline. Prosecutors are weighing penalties for the bank, including a fine and a reprimand, related to allegations staff tried to conceal losses last year, the New York Times reported. The U.S. may announce charges as early as this week against former London-based employees, a person familiar with the matter said.

Tesla (TSLA) slumped 3.7 percent to $147.38. Investors are pricing in the company’s development into a successful premium manufacturer similar to Porsche Automobil Holding SE over the next decade, and any “execution issues” with its electric car models could send the shares down to $100, Aditya Satghare, an analyst with Lazard, wrote in a note to clients.

Sysco, Apple

Sysco fell 5.8 percent, the most in the S&P 500, to $32.99. The food distributor said it will not meet its fiscal 2015 earnings forecast as weak restaurant traffic hurt profit.

Apple advanced 2.8 percent to $467.36, snapping a four-day losing streak. The U.S. International Trade Commission on Aug. 9 said Samsung Electronics infringed two Apple patents and issued an order banning imports of products using the iPhone maker’s multitouch features and headphone jack detection.  F5 Networks (FFIV) Inc. gained 3.1 percent to $92.70. Barclays Plc analyst Ben Reitzes upgraded the Internet software provider to overweight from equalweight, citing improved prospects in the company’s networking business and “significant” opportunities to provide security solutions.

BlackBerry jumped 10 percent, the most since March 11, to $10.78. The mobile device maker said it has formed a special committee to explore options including a sale of the company or a joint venture. Its shares slumped 18 percent this year through the end of last week.

J.C. Penney

Newmont Mining Corp., the world’s second-biggest gold producer, gained 4.7 percent to $30.90 for the largest increase in the S&P 500, as the precious metal rose a fourth day, the longest rally in almost a month. Barrick Gold Corp, Newmont Mining’s bigger rival, added 4.5 percent to $18.21.

J.C. Penney Co. gained 2.3 percent to $13.17. The stock erased an earlier decline people familiar with the situation said shareholders Soros Fund Management LLC and Glenview Capital Management LLC support the current management team in a dispute between Bill Ackman and Chairman Tom Engibous over the company’s leadership.

Ackman, whose Pershing Square Capital Management LP owns about 18 percent of the retailer’s shares, asked his fellow J.C. Penney directors last week to expedite the search for a new chief executive officer and to replace Engibous. The stock tumbled 5.8 percent Aug. 9 and has lost 33 percent this year.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Nick Taborek in New York at ntaborek@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net

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