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U.S. Stocks Fall After Weaker Housing, Confidence Data

U.S. stocks fell, with the Standard & Poor’s 500 failing to break a record for a second day, after data showed slower growth in home prices and a drop in consumer confidence.

Office Depot Inc. (ODP) lost 8.8 percent after reporting an unexpected loss. Tenet Healthcare Corp. declined 9.1 percent as its forecast missed analysts’ estimates. Macy’s Inc. and Home Depot Inc. rose at least 4 percent on higher-than-estimated earnings. Tesla Motors Inc. climbed 14 percent as Morgan Stanley more than doubled its projected price for the stock.

The S&P 500 slipped 0.1 percent to 1,845.12 at 4 p.m. in New York. The U.S. equity benchmark briefly surpassed its record closing high and then erased gains in the afternoon. The Dow Jones Industrial Average slid 27.48 points, or 0.2 percent, to 16,179.66. About 6.7 billion shares changed hands on U.S. exchanges, in line with the three-month average.

“We’re kind of teetering with the new all-time high,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said by phone. “People are taking a step here and watching to see if we can get there again.”

Investors are taking advantage of near record stock prices to book gains. About $1.7 billion was taken out of U.S. equity exchange-traded funds yesterday, bringing total withdrawals to almost $6 billion in February, data compiled by Bloomberg show. A record $139 billion was added to the ETFs in 2013 as the S&P 500 jumped 30 percent for the best annual gain since 1997.

Bull Market

The S&P 500 has rallied almost 6 percent since Feb. 3 as investors speculated that severe winter weather explains the weakness in reports such as housing and hiring. Federal Reserve Chair Janet Yellen said this month that the economy has strengthened enough to withstand stimulus cuts, adding that only a notable change to the outlook would prompt the central bank to slow the pace of tapering.

“The market has done extremely well in February,” Doug Cote, chief market strategist at ING U.S. Investment Management in New York, in a telephone interview. His firm oversees about $200 billion. “2014 is more of a recognition that we’re in a global economic expansion and no longer a recovery.”

Three rounds of stimulus have helped push the S&P 500 173 percent higher from a 12-year low in 2009, including a 3.5 percent gain this month.

Homes, Consumers

Home prices in the U.S. climbed at a slower pace in the year through December, indicating the market is entering a new stage that will help sustain further progress. The S&P/Case-Shiller index of property values in 20 cities rose 13.4 percent from December 2012 after increasing 13.7 percent in the year ended in November, the group said today in New York. It was the first deceleration since June.

A Conference Board report showed a measure of confidence among U.S. consumers fell to 78.1 in February from 79.4 the prior month. The median forecast in a Bloomberg survey of economists called for a reading of 80.

The Chicago Board Options Exchange Volatility Index fell 3.9 percent today to 13.67. The gauge of S&P 500 (SPX) options known as the VIX is down 0.4 percent for the year.

Office Depot dropped 8.8 percent to $4.88 after reporting an unexpected loss of 3 cents a share in the fourth quarter. Analysts on average had predicted a profit of 3 cents per share.

Tenet lost 9.1 percent to $43.93. Earnings before interest, taxes, depreciation and amortization may be $1.8 billion to $1.9 billion this year, the company said in a statement. Analysts anticipated $1.96 billion, the average of 18 estimates compiled by Bloomberg.

RealPage Drops

RealPage Inc. plunged 23 percent to $16.03. The property-services company reported fourth-quarter earnings of 16 cents a share, missing the 17-cent median of analyst estimates compiled by Bloomberg. RealPage also acquired the assets of Bookt LLC, which owns the vacation-rental booking website InstaManager.

Macy’s climbed 6.1 percent to $56.25. The second-largest U.S. department-store company topped fourth-quarter profit estimates after recording a smaller-than-projected charge for a cost-cutting program.

Home Depot advanced 4 percent to $80.98. The largest U.S. home-improvement chain has posted six straight years of meeting or exceeding projections as the U.S. housing rebound spurs spending on renovations. The company also raised its quarterly dividend by 21 percent to 47 cents a share.

Tesla climbed 14 percent to $248. Morgan Stanley analyst Adam Jonas raised his price target on the electric car maker to $320. Tesla last week posted results that beat analyst estimates and said it is gearing up for further growth with plans to raise Model S sedan production 56 percent this year and to build a battery plant.

Chinese Website

LinkedIn Corp. increased 5.1 percent to $209.84. The professional social-networking company is establishing a Chinese-language website that will restrict some content to adhere to state censorship rules, moving to expand in a country where U.S. technology companies have clashed with the government.

Zulily Inc. (ZU) jumped 36 percent to $58.41 after saying it expects first-quarter sales of $225 million to $235 million. The forecast exceeded the $223 million average estimate by analysts. The online retailer also reported fourth-quarter earnings of 10 cents a share, exceeding the 4 cent-average of analysts surveyed by Bloomberg.

InterMune Inc. soared 171 percent to $37.80 after its drug pirfenidone for a fatal lung disease met goals of a study expected to support U.S. approval.

To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net

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

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