U.S. Stocks Close Little Changed as Apple Offsets Monsanto Gains

  • Late-session surge in crude spurs rebound to erase most losses
  • Kohl’s results add to anxiety over stamina of consumers

U.S. stocks closed little changed in a whipsaw session, as rising oil prices bolstered an afternoon rebound while a selloff in Apple Inc. was offset by gains in Monsanto Co.

Apple fell to a 22-month low after a report fueled speculation iPhone sales continue to slump. Monsanto jumped 8.4 percent as people familiar with the matter said Bayer AG is exploring a potential bid for its U.S. competitor. Kohl’s Corp. sank 9.2 percent after its earnings and sales results missed predictions, adding to worry that consumers haven’t loosened spending habits even as economists forecast that a government report Friday will show the biggest gain in retail sales in 11 months.

The S&P 500 fell less than 0.1 percent to 2,064.11 at 4 p.m. in New York, after swinging between gains and losses. The worst of the days declines halted at the index’s average price during the past 50 days. The Dow Jones Industrial Average rose 9.38 points, or 0.1 percent, to 17,720.50, after losing nearly 86 points. The Nasdaq Composite Index lost 0.5 percent amid Apple’s slump. About 7.1 billion shares traded hands on U.S. exchanges, 5 percent below the three-month average.

“The markets have expended a lot of energy to stay flat,” said Eric Wiegand, senior portfolio manager at the Private Client Reserve of U.S. Bank in New York, which oversees $125 billion. “It really is like trying to tread water in a very choppy environment. We’re seeing a lot of rotation beneath the surface. We’re not surprised by volatility. Not just some downside volatility like yesterday, but the potential for upside price movements as well.”

A roller-coaster week continued as equities struggled to regain upward momentum that has remained elusive since the S&P 500 reached a four-month high three weeks ago. The benchmark rallied the most in two months on Tuesday amid a rebound in commodities, only to dive yesterday after disappointing results from Walt Disney Co. and Macy’s Inc. battered consumer shares and sparked a broader selloff.

With Apple souring sentiment in the tech group, semiconductor shares fell to a two-month low. Micron Technology Inc. and Skyworks Solutions Inc. dropped at least 4.5 percent, while Intel Corp. fell 1 percent. Elsewhere, Allergan Plc and Gilead Sciences Inc. lost at least 1.3 percent to pace a slide in health-care. The Nasdaq Biotechnology Index sank 1.7 percent, bringing its two-day retreat to 4.7 percent.

Stocks have churned after the S&P 500 last month reached the highest level since Dec. 1 and came within 1.4 percent of a record set a year ago. The gauge surged as much as 15 percent from a 22-month low in February as crude rebounded, weakness in China showed signs of stabilizing and central bankers signaled they’ll maintain efforts to boost growth. Since the recent high on April 20, the benchmark has ambled in 70-point range as tepid earnings and economic data cooled investors’ risk appetite.

Data Watch

A report today showed applications for unemployment benefits unexpectedly increased to the highest level since February 2015, signaling a more modest recovery lies ahead as companies adjust headcounts after a first-quarter slowdown in demand. The government’s retail sales data due on Friday are forecast to show a rebound for April after unexpectedly declining in March. Readings on consumer sentiment, producer prices and business inventories are also scheduled for release tomorrow.

Weaker-than-predicted monthly payrolls figures last week helped push back expectations for Federal Reserve rate increases, with traders pricing in only a 4 percent chance the central bank will act in June. December is now the first month with at least even odds of higher borrowing costs.

Boston Fed President Eric Rosengren sounded a hawkish note today, saying recent data warrant continued gradual rate increases and policy makers could risk stoking a bubble in the commercial real estate market if they delay action for too long.

With the earnings season drawing to a close, analysts estimate income at S&P 500 companies fell 7.4 percent in the first quarter. Among the 90 percent members that have announced results so far this season, 75 percent beat profit forecasts, and 54 percent exceeded sales expectations.

“Part of what’s helping the market is that investor expectations on earnings are generally not so high,” said Frances Hudson, a global thematic strategist at Standard Life Investments in Edinburgh. “Retail sales will be an important indicator tomorrow, as the U.S. consumer has been stalwart to the economy.”

The CBOE Volatility Index fell 1.9 percent Thursday to 14.41, wiping out a climb of as much as 5 percent. The measure of market turbulence known as the VIX is down 8 percent this month after rising 13 percent in April.

Materials, Industrials

In Thursday’s trading, seven of the S&P 500’s 10 main industries advanced, with phone, raw-material and consumer staples companies rising at least 0.4 percent. Health-care shares lost 0.6 percent, while the technology group slipped 0.4 percent after falling as much as 1.1 percent.

Monsanto’s strongest rally since August boosted the raw materials group. The potential takeover by German competitor Bayer looks to extend a record-setting pace for consolidation in the chemical sector, as low crop prices drive mega-deals in agriculture. Sealed Air Corp. gained 2.5 percent after Goldman Sachs Group Inc. rated the shares a buy.

Industrial stocks fell for the third time in four days, with airlines weighing the most. The Dow Jones Transportation Average marked the biggest back-to-back decline since Jan. 8, with air carriers pummeled for a second day. JetBlue Airways Corp. and United Continental Holdings Inc. slid more than 4.4 percent, while a Bloomberg index of U.S. airlines dropped to a three-month low.

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