U.S. stocks closed little changed as corporate deal activity was overshadowed by concern a fixed-income selloff is not done, and weaker-than-forecast retail sales disappointed investors who were expecting a rebound from a winter slowdown.
Owens-Illinois Inc. climbed 9.2 percent after a pact to buy the food-and-beverage glass business of Vitro SAB. Williams Cos. rallied 6.2 percent as it plans to buy the 40 percent of Williams Partners LP it doesn’t already own. Pall Corp. added 4.4 percent after its $13.8 billion deal with Danaher Corp. Retailers’ shares slipped after the sales data, led lower by Macy’s Inc.
The Standard & Poor’s 500 Index fell less than 0.1 percent to 2,098.48 at 4:00 p.m. in New York, as the benchmark dropped for a third day, its longest losing streak in six weeks. The Dow Jones Industrial Average declined 7.74 points, or less than 0.1 percent, to 18,060.49. The Nasdaq Composite Index increased 0.1 percent. About 6.2 billion shares traded hands Wednesday, 3.7 percent below the three-month average.
“We’ve been at the mercy of the bond market because of a news vacuum with corporate earnings finished and a light economic calendar, but equities have been remarkably resilient in the face of yields and uncertainty about when the Fed will pull the trigger,” said Kelly Bogdanov, the San Francisco-based vice president and portfolio analyst at RBC Wealth Management.
The S&P 500 slid Tuesday as a rout in fixed-income markets spread to equities, with the 10-year Treasury note’s yield reaching the highest since November before slipping. Yield on the benchmark notes rose three basis points to 2.28 percent Wednesday.
The unchanged April retail sales reading followed a revised 1.1 percent gain in March that was the biggest in a year and larger than previously estimated. Economists surveyed by Bloomberg called for a 0.2 percent gain in April. Data are also due later this week on consumer sentiment, jobless claims and industrial production.
Concern the Federal Reserve would raise interest rates even with worsening economic data and predictions for an earnings slump have whipsawed stocks between gains and losses in the past five weeks. The S&P 500 fell for the past two days after jumping the most since March on Friday amid data that showed hiring bounced back in April from a winter slowdown.
“We had a couple down days and now all this bad data just pushes out the Fed longer to tighten,” said Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC. NorthCoast has $3 billion under management. “It’s going to be range-bound trading until we get something that will break us through.”
The S&P 500 is trading within its tightest trading range to start a year in almost a decade: roughly 125 points. The peak-to-trough move of 6.3 percent is the smallest at this point of any year since 2006. The gauge is 0.9 percent below its April 24 record.
Most companies in the benchmark have already reported results this earnings season, with 72 percent beating estimates. Analysts now project profit at S&P 500 members grew 0.2 percent in the first quarter, reversing earlier predictions for a decline. Their March estimates called for a 5.8 percent drop.
The Chicago Board Options Exchange Volatility Index fell 0.7 percent to 13.76, after ending little changed Tuesday. The gauge, known as the VIX, is on track for its third straight weekly gain for the first time since September. Six of the S&P 500’s 10 main groups declined Wednesday, led by energy, consumer discretionary and utilities shares. Technology companies advanced the most, up 0.5 percent.
Semiconductors rebounded from a 0.9 percent drop Tuesday, lifting tech shares. Micron Technology Inc. and Intel Corp. rose more than 1.1 percent. Microsoft Corp. added 0.6 percent after Deutsche Bank analyst Karl Keirstead upgraded shares to buy from hold, citing “relatively cheap” valuation with more positive than negative catalysts.
Qualcomm Inc. advanced 1.4 percent as the chipmaker plans to tap the corporate bond market for the first time, with proceeds to be used for general corporate purposes, including financing a capital return program and acquisitions.
Owens-Illinois rallied 10 percent, the biggest jump since 2009, after the world’s largest maker of glass containers agreed to buy Vitro’s business for about $2.15 billion to extend its reach in Mexico.
Pall Corp. added 4.4 percent to its 19 percent rally Tuesday after Danaher agreed to buy the water-systems maker for $13.8 billion. It’s Danaher’s biggest-ever acquisition, and it plans to split itself into two independent, publicly traded companies.
Williams Partners jumped 21 percent, the most ever, after Williams Cos. agreed to buy the 40 percent of the pipeline company it doesn’t already own for $13.8 billion, simplifying its corporate structure in a bid to reduce taxes, increase payouts and accumulate cash for expansion.
“There’s an awful lot of M&A and it’s certainly helping from a confidence level,” said Mark Spellman, a portfolio manager who helps oversee $4.2 billion at Alpine Funds in Purchase, New York. “If they thought there was a recession or profit problem in the near-term they probably wouldn’t do that.”
Macy’s slumped 2.5 percent after the largest U.S. department-store chain reported first-quarter earnings that trailed analysts’ estimates as bad weather in Northeastern states and product delays at the West Coast ports hurt sales. Ralph Lauren Corp. sank 3 percent, the most in three months, and Fossil Group Inc. fell 2.1 percent to its lowest since 2012 to pace a retreat in consumer discretionary shares.
DuPont Co. lost 7.4 percent, the biggest drop since 2012, as investors rejected investor Nelson Peltz’s attempt to get on the chemical maker’s board, the first failure for an activist campaign mounted by his firm Trian Fund Management since it was founded a decade ago.
Union Pacific Corp., CSX Corp. and Kansas City Southern declined more than 1.5 percent, leading a 1 percent retreat in the Dow Jones Transportation Average which fell to a six-month low. Union Pacific slid to its lowest level since October as Wolf Research LLC analyst Scott Group cut second-quarter profit estimates for railroads, citing lower coal and grain volumes.
The utilities group fell 1.1 percent to a two-month low as rising yields on Treasuries make the sector’s 3.7 percent dividend payout less attractive. Edison International Inc. sank 1.1 percent to an almost seven-month low.