U.S. Stocks Little Changed Before Jobs Data as Retailers Slump

  • Retailers lead decline as L Brands posts disappointing results
  • Oil & gas producers advance, as crude climbs for second day

Brian Belski: Bull Market Is Still Very Much Alive

U.S. stocks were little changed ahead of Friday’s key employment data, as declines by retailers and defensive shares overshadowed a rebound in energy companies.

Retailers slid after L Brands Inc. posted preliminary first-quarter profit that trailed estimates. Utility and telephone stocks retreated, as investors capitulated from a recent preference for companies less tied to growth. Tesla Motors Inc. slumped 5 percent after UBS Group AG described the electric-car maker’s new production goals as “too optimistic.” Meanwhile, oil and gas producers advanced, as crude topped $44 a barrel after data showed Wednesday U.S. oil production dropped last week to the lowest level since September 2014.

The S&P 500 slipped less than one point to 2,050.63 at 4 p.m. in New York, trading near the lowest level since April 11. The Dow Jones Industrial Average added 9.45 points to 17,660.71. Volume on U.S. exchanges was about 5 percent below the three-month average.

“Sentiment is more negative than I would’ve thought after such a strong rally off that February low,” said Charlie Bilello, director of research at New York-based Pension Partners LLC. “This is a normal kind of digestive period or consolidation after a strong move and ahead of the jobs report tomorrow.” 

A rally that sent the S&P 500 up as much as 15 percent lost steam after reaching a high on April 20, as lukewarm earnings results and signs of tepid global growth damped the appeal of risky assets. The benchmark gauge came within 1.3 percent of a record set a year ago in April. It’s down 0.7 percent this week.

The retreat in U.S. shares comes amid heightened speculation over the timing of the Federal Reserve’s next move. While the Fed Bank chiefs of Atlanta and San Francisco highlighted this week the prospect of tighter policy next month, traders are pricing in just a 10 percent chance of the central bank boosting interest rates then. A government jobs report due tomorrow may shed light on U.S. growth and the trajectory of borrowing costs.

Data today showed applications for unemployment benefits rose by 17,000 to 274,000 in the week ended April 30, a five-week high and above the 260,000 economists predicted. Earlier in April claims were at 248,000, the fewest since 1973. Friday’s payrolls data is projected to show a 200,000-worker increase for April, from 215,000 in March.

Corporate results continue to hold investors’ attention, with more than two-thirds of S&P 500 companies having already reported earnings this season. While about 75 percent of the firms have beaten profit forecasts, and 55 percent exceeded sales expectations, analysts are still projecting an 8.2 percent decline in first-quarter earnings.

L Brands, owner of the Victoria’s Secret chain, tumbled 12 percent, leading other retailers like Urban Outfitters Inc. and Gap Inc. lower. Fitbit Inc. plunged 19 percent after the maker of wearable fitness trackers forecast profit that fell short of expectations. AmerisourceBergen Corp. dropped 7.5 percent after cutting its profit forecast for 2016. CenturyLink Inc. slid 8.9 percent after posting quarterly earnings that trailed projections.

Meanwhile, Kraft Heinz Co. jumped 3.7 percent after reporting profit that topped predictions. Yahoo! Inc., which owns a stake in Alibaba Group Holding Ltd., increased 2.6 percent after the Chinese e-commerce company’s quarterly revenue surpassed estimates. Whole Foods Market Inc. added 6 percent after reporting quarterly earnings that topped analysts’ estimates following cost-cutting measures.

Apache Corp. and Williams Cos. posted among the biggest gains by energy producers, rallying more than 6.9 percent. Media, health-care equipment and semiconductor companies also rose today, after Scripps Networks Interactive Inc., McKesson Corp and Qorvo Inc. released quarterly results that surpassed projections.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE