U.S. Stocks Little Changed Amid Ukraine Tension, Data
U.S. stocks were little changed, after the Standard & Poor’s 500 Index rose the most this year yesterday, as investors assessed the Ukraine crisis and weaker-than-estimated data on payrolls and services.
Exxon Mobil Corp. dropped 2.8 percent, the most since 2012, to lead energy producers lower. Target Corp. fell 1.2 percent after the retailer’s chief information officer resigned. Smith & Wesson Holding Corp. jumped 16 percent after the gun maker raised its profit forecast. GameStop Corp. added 3.8 percent after boosting its quarterly dividend.
The S&P 500 (SPX) fell less than one point to 1873.81 at 4 p.m. in New York after yesterday closing at a record. The Dow Jones Industrial Average fell 35.70 points, or 0.2 percent, to 16,360.18. About 6.5 billion shares changed hands on U.S. exchanges, in line with the 30-day average.
“I think Ukraine is certainly on the market’s radar screens and certainly still in the headlines,” Jeffrey Kleintop, chief market strategist at LPL Financial LLC, which manages $414.7 billion, said by phone from Boston. “Markets are continuing to give a free pass to any weak economic number because of the weather. That could be the case for much of the data we’re going to get through February. Stocks will ignore the data if it’s bad and rally on the number if it’s good.”
The S&P 500 jumped 1.5 percent yesterday after comments from Russian President Vladimir Putin spurred speculation that the Ukraine crisis won’t immediately worsen. The index had dropped the most in a month on March 3 and a gauge of volatility spiked 14 percent on concern that Russia’s military presence in the Crimea region could lead to a larger conflict.
Secretary of State John Kerry met Russian Foreign Minister Sergei Lavrov in Paris today to discuss the crisis. Lavrov said the western-backed government in Kiev no longer rules over Crimea and control has shifted to armed “self-defense” groups. Kerry warned Russia against violating “very clear legal obligations” to uphold Ukraine’s unity.
The U.S. has considered sanctions against Russia and aid to the government in Kiev. Putin said yesterday he saw no immediate need to invade Ukraine, though he reserved the right for military action to defend ethnic Russians in the region.
“Markets globally are very resilient to these types of events,” Patrick Spencer, head of equity sales at Robert W. Baird & Co. in London, said in a phone interview, referring to the tensions in Ukraine. “The volatility certainly for this geopolitical situation is noisy but I don’t think it’s the key. Far more important is policy on interest rates. The macro direction and economic growth environment has been strong.”
U.S. companies added 139,000 workers in February, fewer than the 155,000 advance estimated by economists, a sign that employers were waiting for a pickup in demand before boosting headcount, a report from the ADP Research Institute in Roseland, New Jersey showed today.
Separate data indicated that service industries in the U.S. expanded in February at the slowest pace in four years, reflecting a plunge in hiring that shows the biggest part of the economy is struggling as harsher weather weighs on consumers and businesses. The Institute for Supply Management’s non-manufacturing index slipped to 51.6 in February from 54 the previous month.
Investors have been speculating that recent weakness in data from housing to jobs was caused by inclement weather. The Labor Department will release its February jobs report on March 7. Economists estimate employers increased the pace of hiring to 150,000 workers after adding 113,000 in January, according to a Bloomberg survey.
The Federal Reserve said the economy in most regions grew last month even as harsh winter weather impeded hiring, disrupted supply chains, and kept customers away from stores and auto dealerships. Eight of the Fed’s 12 districts “reported improved levels of activity, but in most cases the increases were characterized as modest to moderate,” the central bank said today in its Beige Book business survey.
The Fed has been slowing its monthly asset purchases while pledging that it will keep interest rates near zero percent. Three rounds of stimulus have helped push the S&P 500 up 177 percent from a 12-year low, as U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009.
The Chicago Board Options Exchange Volatility Index (VIX), a gauge for U.S. stock volatility, fell 1.5 percent to 13.89 today. The gauge plunged 12 percent yesterday.
Investors have added $4.8 billion to U.S. equity exchange-traded funds in the past five days and withdrawn $5.8 billion from bond ETFs, data compiled by Bloomberg show. Energy and real-estate stocks absorbed the most money among industry ETFs, with each taking in more than $700 million during the past week.
Five of 10 S&P 500 groups retreated today, with energy stocks falling 1.1 percent to pace declines. Financial shares rallied 0.7 percent for the biggest gain.
Exxon lost 2.8 percent to $93.80 for the steepest drop in the Dow. The company’s biggest international exploration opportunity may be imperiled by Russian President Vladimir Putin’s Ukrainian foray, as U.S.-based companies could face restrictions on doing business in Russia.
Exxon, under the terms of a 2011 contract with state-controlled OAO Rosneft, owns drilling rights across 11.4 million acres of Russian land, its biggest exploration holding outside the U.S.
Target fell 1.2 percent to $60.60. The retailer, still reeling from a security breach that exposed the personal information of tens of millions of customers, is seeking a new top technology executive to help prevent future attacks after Beth Jacob resigned today.
Smith & Wesson added 16 percent to $13.74 for its biggest advance since June 2012. The maker of handguns forecast annual earnings will be between $1.39 a share and $1.42, up from a previous projection of as much as $1.35.
GameStop jumped 3.8 percent to $38.75. The video-game retailer said it will raise its quarterly payout to 33 cents from 27.5 cents.
Brown-Forman Corp. rose 3.7 percent to a an all-time high of $87.11. The maker of whiskey and other spirits raised its full-year profit forecast after third-quarter earnings surpassed estimates.
Facebook Inc. advanced 4 percent to a record $71.57 for the biggest gain in the S&P 500. Stifel Nicolaus & Co analyst Jordan Rohan raised his 12-month price target on the social-networking company to $82 from $72, citing Facebook’s growing share of marketing spending. Rohan has a buy rating on the stock.
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