U.S. Stocks Erase Gains as Optimism on Jobless Data Fades

U.S. stocks erased gains as optimism about a drop in jobless claims faded and a slump in Apple Inc. dragged down technology shares.

The Standard & Poor’s 500 Index pared an advance of 0.8 percent as Apple extended its retreat from a September record to more than 10 percent. Bank of America Corp. and Morgan Stanley advanced at least 1.4 percent as energy and financial stocks posted the biggest rallies out of 10 groups in the S&P 500. Sprint Nextel Corp. jumped 14 percent as it said it’s in talks with Japan’s Softbank Corp. about a potential transaction.

The S&P 500 increased less than 0.1 percent to 1,432.84 at 4 p.m. in New York. The benchmark gauge fell to the lowest level in a month yesterday on concern that the global economy is slowing down. The Dow Jones Industrial Average lost 18.58 points, or 0.1 percent, to 13,326.39. More than 6 billion shares traded hands on U.S. exchanges today, in line with the three-month average.

“Weakness in Apple continues to be watched and traders are eyeing the S&P 50-day moving average as we slowly slip back towards that level,” Ryan Larson, the Chicago-based head of U.S. equity trading at RBC Global Asset Management (U.S.) Inc., said in an e-mail. His firm oversees $250 billion in assets.

The S&P 500 has slipped 2.3 percent since reaching an almost five-year high of 1,465.77 on Sept. 14. The benchmark index is less than 1 percent higher than its 50-day moving average of 1,427.11. Apple, the world’s most valuable company, sank 2 percent to $628.10, erasing an earlier rally of as much as 1 percent and helping to reverse gains for technology companies as a group in the S&P 500. The iPhone maker is down 11 percent since reaching its all-time high of $702.10 on Sept. 19.

Jobs Report

Stocks rallied earlier today after Labor Department figures showed fewer Americans than forecast filed first-time claims for unemployment benefits last week. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008. Economists forecast 370,000 claims, according to the median estimate in a Bloomberg survey.

One state accounted for most of the plunge in claims, a Labor Department spokesman said. The breakdown by state will show up in next week’s report. A separate report showed the U.S. trade deficit widened by 4.1 percent to $44.2 billion from $42.5 billion in July as slower global growth reduced demand for American exports, Commerce Department figures showed.

The claims report “is consistent with the improving jobs numbers and consumer confidence we’ve been seeing,” Brian Gendreau, a market strategist at El Segundo, California-based Cetera Financial Group Inc., said in a telephone interview. The firm has about $20 billion in assets under management. “It just adds to the picture of a U.S. economy that’s recovering. Not as fast as anyone would like, but still improving.”

Italian Bonds

European equities climbed earlier as Italy sold 3.75 billion euros ($4.8 billion) of its benchmark three-year bonds at 2.86 percent. Investors bid for 1.67 times the amount offered, up from 1.49 times last month. S&P yesterday cut Spain’s debt rating to one level above junk, citing economic and political risks as the government considers a second bailout.

Bank of America, the second-largest U.S. bank by assets, gained 1.4 percent to $9.34. Morgan Stanley rose 2.6 percent to $17.86. The European Union may push back the deadline for applying tougher bank-capital rules for as long as a year, after warnings from lenders that pressing ahead with the original timetable may drive up their costs, according to three people familiar with the talks.

Draft Rules

Othmar Karas, the lawmaker leading work on the draft rules in the European Parliament, denied that any discussion took place in meetings today on a change of dates for when the rules set by the Basel Committee on Banking Supervision might enter into force.

JPMorgan Chase & Co. and Wells Fargo & Co. are scheduled to report quarterly earnings tomorrow. Analysts forecast Wells Fargo, the largest U.S. home lender, will post record profit. The San Francisco-based company slid 0.1 percent to $35.18. JPMorgan gained 0.8 percent to $42.10.

Energy and financial companies jumped at least 0.5 percent among 10 groups in the S&P 500, while phone and consumer shares fell the most. Investors bought shares of companies most tied to economic growth as the Morgan Stanley Cyclical Index gained 0.5 percent, halting three days of losses.

Sprint Nextel Corp. jumped 14 percent, the biggest gain in the S&P 500, to $5.76. The company said it’s in talks with Softbank for a “substantial” investment from the Japanese carrier, potentially shifting the balance of power in the U.S. telecommunications industry. Softbank, Japan’s third-largest mobile-phone company, is seeking control of Overland Park, Kansas-based Sprint, according to two people familiar with the matter, who asked not to be identified because the discussions are private.

Clearwire, MetroPCS

Clearwire Corp., which has a joint venture with Sprint, rallied after a person familiar with the matter said Softbank may also buy the company. Shares surged 71 percent to $2.22. MetroPCS Communications Inc., which Sprint has considered buying, slumped 3.3 percent to $11.64. The shares briefly erased losses earlier after Japan’s Nikkei newspaper reported Softbank plans to acquire MetroPCS.

Fastenal Co. jumped 8.4 percent to $45.89. The largest U.S. retailer of nuts, bolts and other fasteners reported sales in the third quarter were $802.6 million, exceeding the average analyst estimate of $801.4 million. Daily sales growth in September was 13 percent, up from 12 percent in the prior month.

Oshkosh, Navistar

Oshkosh Corp. soared 11 percent to $29.90 after billionaire activist investor Carl C. Icahn offered to buy the U.S. military’s biggest supplier of blast-resistant trucks for $32.50 a share. Icahn is the largest shareholder of the Wisconsin-based company, according to Bloomberg data. Navistar International Corp., another truckmaker in which Icahn is the third-largest holder, also rose, increasing 2.8 percent to $22.61.

Realogy Holdings Corp. climbed 27 percent to $34.20 in its trading debut. The real-estate brokerage company controlled by Apollo Global Management LLC raised $1.08 billion in its initial public offering, pricing the shares at the top of the planned range. Shares had been offered for $23 to $27 each.

Dollar Tree Inc. lost 7.7 percent to $43.28, for the biggest decline in the S&P 500. Executives of the discount-store operator said in a presentation at its capital markets conference that sales in the third quarter will be at the low end of its forecast amid long-term unemployment, high gas prices and uncertainty from U.S. elections. The Chesapeake, Virginia-based company had predicted in August that revenue in the period will be between $1.71 billion and $1.75 billion.

Safeway Inc. declined 3.6 percent to $15.71. The second-largest U.S. grocery store chain posted third-quarter sales that trailed analysts’ estimates as bargain-hunting shoppers made it harder to boost prices.

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