S&P 500 Little Changed After Gauge Fails to Hold Record

U.S. stocks were little changed, after the Standard & Poor’s 500 Index erased earlier gains and failed to hold above its record closing level for a third straight day.

Chesapeake Energy Corp. slid 4.9 percent after profit fell short of estimates. First Solar Inc. tumbled 9.1 percent after posting a 58 percent drop in quarterly profit. Lowe’s Cos. and Abercrombie & Fitch Co. jumped more than 5.4 percent after announcing buyback plans. Target Corp. gained 7 percent as profit topped analysts’ estimates. An S&P index of homebuilders climbed 3 percent as Lennar Corp. and PulteGroup Inc. increased at least 2.8 percent.

The S&P 500 (SPX) rose less than one point to 1,845.16 at 4 p.m. in New York. The Dow Jones Industrial Average added 18.75 points, or 0.1 percent, to 16,198.41. About 6.9 billion shares changed hands on U.S. exchanges, 7 percent above the 30-day average.

“The market in the short term is a little tired,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “Sure, we have problem breaking through it, setting new all-time highs. But I think that’s temporary. I don’t think there is going to be any material downside from these levels because there isn’t really anything that’s fundamentally driven, it’s more sentiment driven.”

The S&P 500 rose as much as 0.4 percent earlier today as sales of new homes unexpectedly climbed and retailers rallied. The gauge topped its previous closing high of 1,848.38 reached on Jan. 15, something it has done each day this week, only to retreat from that level by the end of the session. The index came within six points of the record each day last week. It reached an intraday high of 1,858.71 on Feb. 24.

Afternoon Retreat

Today marks the fourth straight day the S&P 500 pared or erased gains in the afternoon. The index has lost 0.06 percent in the last hour of trading this year through yesterday, the worst hourly performance of the day, according to data from Bespoke Investment Group LLC.

The gauge has rallied 5.9 percent since a low on 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 can withstand stimulus cuts, adding that only a notable change to the outlook would prompt the central bank to slow the pace of tapering. Yellen will testify tomorrow on monetary policy before the Senate.

Three rounds of stimulus have helped push the S&P 500 up as much as 173 percent from a 12-year low in 2009. The index tumbled as much as 5.8 percent from its Jan. 15 record on concern that growth was slowing in China and amid a rout in emerging-market currencies.

‘Nothing’s Changed’

“We went through a snapback rally and got right back to the all-time highs,” James W. Gaul, a portfolio manager at Boston Advisors LLC, which oversees about $2.5 billion from Boston, said by phone. “Nothing has changed from a month ago, so what’s the fuel to keep pushing stocks higher. Earnings are almost over and we need news to move higher.”

Money is beginning to return to ETFs with the S&P 500 trading near record levels. About $21 billion has been added to ETFs that buy and sell American shares in the past two weeks as stock prices recovered, according to data compiled by Bloomberg. The deposits compare with about $407 million sent to fixed income since Feb. 11.

Earnings beat analysts’ estimates at about 70 percent of the 471 companies in the S&P 500 that have posted results so far this season, according to data compiled by Bloomberg. Analysts estimate earnings for S&P 500 companies grew by 8.6 percent in the fourth quarter of 2013, according to a survey of analysts.

Data today showed sales of new U.S. homes increased 9.6 percent to a 468,000 annualized pace in January, exceeding the highest estimate of economists surveyed by Bloomberg and the most since July 2008.

The Chicago Board Options Exchange Volatility Index advanced 5 percent today to 14.35, its first increase in five days. The gauge of S&P 500 options known as the VIX is up 4.6 percent for the year.

Six of 10 main S&P 500 groups retreated, with energy and utilities stocks falling at least 0.5 percent for the biggest drops. Exxon Mobil Corp. retreated 0.5 percent for the second-largest drop in the Dow.

Solar, Gas

First Solar sank 9.1 percent to $52.74. The largest U.S. solar-panel manufacturer said profit in the fourth quarter slid as revenue slumped from the utility-scale power plants it is building in the southwest of the U.S. Net income fell to $65.3 million from $154.2 million, First Solar said in a statement.

Chesapeake Energy plunged 4.9 percent to $25.61. The second-largest U.S. natural-gas producer missed analysts’ profit estimates by the biggest margin in almost two years as energy prices fell and costs to exit leases and cut jobs rose.

Natural gas futures fell in New York, bringing the three-day slide to 20 percent, as forecast showed a less-intense cold front across the U.S. East.

DreamWorks Animation SKG Inc. plunged 12 percent to $30.91. The independent animation studio reported that fourth-quarter revenue slumped 23 percent after home-video sales of “Turbo” missed estimates.

Retailers had the biggest gain among 24 major industries in the S&P 500, rallying 1.4 percent.

Lowe’s advanced 5.4 percent to $50.72. The second-largest U.S. home-improvement chain announced a plan to buy back $5 billion in shares. The company also said fourth-quarter profit rose 6.3 percent as the housing rebound spurred renovation spending.

Retailers

Home Depot Inc. added 0.9 percent to $81.70. The company climbed 4 percent yesterday after it posted fourth-quarter profit that topped analysts’ estimates, marking six straight years of meeting or exceeding projections.

Wal-Mart Stores Inc. had the biggest increase in the Dow, advancing 2 percent to $74.78.

Abercrombie & Fitch increased 11 percent to $40.04 after posting fourth-quarter profit that topped analysts’ estimates and saying it would buy back $150 million in shares in the current quarter.

Target Corp. (TGT) added 7 percent to $60.49. The retailer posted fourth-quarter profit that topped analysts’ estimates, signaling that it’s regaining customer loyalty after a data breach affected tens of millions of shoppers at the peak of the holiday season.

Aeropostale Inc., the teen apparel retailer under pressure from an activist investor to sell itself, increased 7.1 percent to $7.43. The company is working with Barclays Plc to explore options such as the sale of a convertible note or preferred stock to a private-equity firm, people with knowledge of the matter said.

Homebuilders climbed, with all 11 members of the S&P Supercomposite Homebuilding Index advancing. Lennar added 3.6 percent to $43.78 and PulteGroup rose 2.8 percent to $21.25.

Cablevision Systems Corp. jumped 3.9 percent to $17.26 as fourth-quarter revenue topped analysts’ estimates and its operating cash flow for the period grew 49 percent.

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

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

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