U.S. stocks retreated, after the Standard & Poor’s 500 Index rose the most in a year yesterday, as energy shares led losses amid a drop in oil prices.
Cimarex Energy Co. and Helmerich & Payne Inc. lost more than 4.6 percent to lead all 43 energy stocks in the S&P 500 lower. Biogen Idec Inc. slid 5.4 percent as sales of its top drug missed analyst estimates. Yahoo! Inc. added 4.5 percent after sales topped estimates. Broadcom Corp. jumped 5.5 percent after reporting earnings that beat estimates and giving a forecast that eased concern chip orders might be drying up.
The S&P 500 slipped 0.7 percent to 1,927.11 at 4 p.m. in New York. The Dow Jones Industrial Average slid 153.49 points, or 0.9 percent, to 16,461.32. The Nasdaq Composite Index lost 0.8 percent. Crude oil slid 2.4 percent to $80.52 a barrel, the lowest level on a closing basis in more than two years, after a U.S. report showed inventories increased by 7.11 million barrels last week.
“The market is driven primarily by trader and investor emotion and sentiment,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc., said in a phone interview. “All that’s going to remain consistent in the short term is that volatility is going to continue and that you’re going to have significant swings just based on trader sentiment, without any specific data points.”
Four consecutive advances in the S&P 500 through yesterday pushed the gauge up 4.2 percent since Oct. 15, recouping half the losses from a selloff that began in mid-September. The equity index surged 2 percent yesterday, its best day since October 2013, as speculation the European Central Bank will boost stimulus to spur growth in the region.
The cost of living in the U.S. barely rose in September, leaving inflation below the Federal Reserve’s goal as fuel prices plunge this month. The consumer-price index climbed 0.1 percent after decreasing 0.2 percent in August, a Labor Department report showed.
Canada’s S&P/TSX Composite Index fell 1.6 percent after a shooting at the national legislature in Ottawa. Stores and office buildings in downtown Ottawa were locked down for about five hours after the unprecedented attack in Canada’s usually sleepy capital, raising terrorism concerns nationwide. Police are continuing to search for suspects after a gunman was killed by parliamentary security officials.
BlackRock Inc. Chief Executive Officer Laurence D. Fink said yesterday the selloff last week in U.S. equity markets “weeded out the excesses,” making stocks a good investment for those who aren’t going to sell their positions soon.
“As a long-term investor, yes, I’d be buying equities,” Fink said yesterday in an interview with Bloomberg Television’s Erik Schatzker. “This is just a market correction, and we need market corrections to clean the market out.”
His remarks were echoed by billionaire hedge-fund manager Dan Loeb. Loeb, who runs Third Point LLC, told investors in a letter yesterday that “going forward, we expect that the U.S. will remain the best place to invest” and that “markets will resume an overall upward trajectory in the U.S. through year-end.”
About 77 percent of S&P 500 companies that have released quarterly results this season beat profit projections, while 61 percent surpassed revenue estimates. Profit for index members rose 5.9 percent in the third quarter and sales increased 4 percent, analysts predicted.
The Chicago Board Options Exchange Volatility Index added 11 percent to 17.87. About 7 billion shares changed hands on U.S. exchanges, 12 percent higher than the three-month average.
Eight of 10 main industries in the S&P 500 declined. Energy shares slipped 1.7 percent as a group for the biggest decline as crude oil slid. Utilities gained 0.6 percent for the biggest advance.
Biogen Idec slumped 5.4 percent to $309.07. Revenue from Tecfidera was $787 million in the third quarter, falling short of the average analyst estimate of $794 million. A patient on the treatment died after developing a rare brain infection known as progressive multifocal leukoencephalopathy, or PML, Chief Executive Officer George Scangos said on a call.
Boeing Co. dropped 4.5 percent to $121.45 for the biggest loss in the Dow. Investors signaled concern that the world’s largest planemaker isn’t moving fast enough to curb costs on the 787 Dreamliner, a carbon-fiber jet on which the company still loses money, after the company reported third-quarter earnings today. Per-share profit growth also was buoyed by expanding margins in the defense business, which is dwarfed by the commercial unit.
Yahoo climbed 4.5 percent to $42. The Web portal reported third-quarter revenue, excluding sales shared with partner websites, that beat estimates and forecast sales of $1.14 billion to $1.18 billion for the current period, exceeding analysts’ average prediction of $1.17 billion.
Chief Executive Officer Marissa Mayer detailed in a conference call after earnings results how Yahoo has bought back 24 percent of shares since late 2012 and said the company’s dealmaking has been “meaningful.” She added that Yahoo is making progress in mobile and the Web portal has been focused on cost efficiencies.
Broadcom jumped 5.5 percent to $39.37. Excluding certain charges, profit last quarter was 91 cents, topping an average analyst estimate of 84 cents. The maker of communications chips also said revenue in the current period will be $2 billion to $2.15 billion, compared with an average estimate of $2.11 billion, according to data compiled by Bloomberg.
Six Flags Entertainment Corp. soared 13 percent to $38.90 for its biggest one-day gain on record. The theme park operator reported adjusted earnings per share and revenue last quarter that beat analysts’ estimates.