- S&P 500 headed toward its worst month in three years
- Energy companies continue to rally as crude oil surges
U.S. stocks ended little changed, with the Standard & Poor’s 500 Index on track for its worst month since May 2012, as equities found some respite from the wide swings prevalent earlier this week.
Energy companies advanced as oil capped its biggest two-day gain since 2009, with Chevron Corp. and Transocean Ltd rising more than 3.5 percent. Intel Corp. and Facebook Inc. gained at least 1.4 percent to boost technology shares. Wal-Mart Stores Inc. lost 1.7 percent, leading consumer staples lower amid a weaker consumer confidence reading. Pfizer Inc. and Johnson & Johnson slumped at least 1 percent to weigh on the health-care group. Freeport-McMoRan Inc. gained 3 percent after Carl Icahn took a stake in the company.
The S&P 500 rose 0.1 percent to 1,988.87 at 4 p.m. in New York, with the gauge posting its best three-day advance since November 2011. The Dow Jones Industrial Average lost 11.76 points, or 0.1 percent, to 16,643.01. The Nasdaq Composite Index added 0.3 percent, and the Russell 2000 Index climbed 0.8 percent. About 7.9 billion shares changed hands on U.S. exchanges, 13 percent above the three-month average.
“The market just may be tired,” said Cam Albright, head of investment strategy at Wilmington Trust in Baltimore. The firm oversees $76 billion. “Perhaps we’re due for a day less traumatic than what we’ve had. There has been a lot of price action in both directions, perhaps traders just made a chance to catch their breath.”
The Chicago Board Options Exchange Volatility Index slipped 0.2 percent to 26.05 Friday. The measure of market turbulence known as the VIX has dropped 36 percent in four days, after a record six-day jump sent the gauge to its highest level since October 2011.
The S&P 500 traded Friday in the narrowest range in almost two weeks. The index’s 0.9 percent gain for the week masks a volatile period in which the benchmark plunged the most since 2011 to enter a correction, only to rally more than 6 percent over two days. The gauge is down 5.5 percent for the month.
The benchmark index yesterday capped its best two-day rally since the beginning of the bull market in 2009, helped by data showing stronger-than-expected U.S. economic growth. The Dow had its strongest back-to-back advance since December 2008. Global equities had lost as much as $8.4 trillion in value after China’s unexpected devaluation of the yuan earlier this month spurred concern the world’s second-biggest economy was on the brink of a deeper slowdown.
“We’re not done with all the volatility in equities,” said Andrew Brenner, the head of international fixed income for National Alliance Capital Markets. “I think the worst is over, but are we out of the woods yet? No -- we’re still going to have a lot of volatility.”
U.S. data today showed consumer spending climbed in July as incomes grew, showing the biggest part of the U.S. economy was off to a good start to the quarter. Wages rose by the most this year, and the report showed inflation remained tame. A separate report showed consumer confidence declined in August to a three-month low as recent stock-market turbulence weighed on Americans’ outlook for the economy in the coming year.
Inflation is the theme at an annual symposium in Jackson Hole, Wyoming this week where Federal Reserve officials and economists have also been discussing market fallout from China’s slowdown that has cast doubt on whether the Fed will raise rates next month. Traders are now pricing in a 38 percent chance the central bank will act in September, up from a one-in-four chance two days ago.
St. Louis Fed Bank President James Bullard said in a Bloomberg Television interview Friday that while world financial markets are volatile, U.S. fundamentals are good and the interest rate-setting Federal Open Market Committee shouldn’t alter its forecast for the economy. Cleveland Fed President Loretta Mester also told Bloomberg TV she thinks the economy is strong enough to withstand higher interest rates.
Fed Vice Chairman Stanley Fischer, speaking on CNBC, said the central bank hadn’t decided on whether to raise its target at the next meeting.
Five of the S&P 500’s 10 main groups rose Friday, with energy shares the top performers while stretching their three-day rally to almost 11 percent, the most since November 2011. West Texas Intermediate crude surged more than 6 percent after rising 10 percent Thursday. Health-care and financial companies lost the most today.
Raw-materials companies climbed for a third day as commodities rallied. Alcoa Inc. surged 6.2 percent, bringing its three-day advance to 16 percent, the most in more than six years. Newmont Mining Corp. added 2.8 percent, while International Paper Co. rose 1.3 percent.
United Continental Holdings Inc. rallied 7.1 percent, the most since November, while Activision Blizzard Inc. gained 4.6 percent after the two companies were added to the S&P 500.
Baxalta Inc. led a slide in the health-care group, losing 3.2 percent. People with knowledge of the matter said the drugmaker is in talks to make an acquisition to bolster its status as an independent company as it tries to fend off a $30 billion takeover offer from Shire Plc. Mylan NV slumped 2.2 percent after shareholders voted in favor of moving forward with a $33 billion hostile bid for over-the-counter drugmaker Perrigo Co.
Kroger Co. joined Wal-Mart to pace the retreat in consumer staples, falling 1.7 percent. Wal-Mart is down 9.8 percent in August, and on track for its worst monthly slide since the depths of the recession in January 2009.
Insurers were the biggest drag on financial companies in the S&P 500. Hartford Financial Services Group Inc., Principal Financial Group Inc. and Travelers Cos. slumped at least 1 percent. Wells Fargo & Co. decreased 0.9 percent to lead a pullback among banks.