Tuesday, 25 February 2014

U.S. Stocks Fluctuate Near Record After Housing Data

  Feb 25, 2014 11:01 AM PT

U.S. stocks fluctuated near a record high after data showed slower growth in home prices and a drop in consumer confidence, while Macy’s Inc. and Home Depot Inc. reported higher-than-estimated earnings.
Macy’s and Home Depot rose at least 3.1 percent. Tesla Motors Inc. climbed 16 percent as Morgan Stanley more than doubled its projected price for the stock. Office Depot Inc. slumped 11 percent after reporting an unexpected loss. Tenet Healthcare Corp. declined 11 percent as its forecast missed analysts’ estimates.
The S&P 500 (SPX) gained 0.1 percent to 1,848.59 at 1:59 p.m. in New York, poised for the highest close ever. Earlier, the U.S. equity benchmark lost 0.4 percent. The Dow Jones Industrial Averageadvanced 14.05 points, or 0.1 percent, to 16,221.19. Trading in S&P 500 stocks was 7 percent below the 30-day average during this time of the day.
“We’re kind of teetering with the new all-time high,” Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati, said by phone. “People are taking a step here and watching to see if we can get there again.”
Investors are taking advantage of record stock prices to book gains. About $1.7 billion was taken out of U.S. equity exchange-traded funds yesterday, bringing total withdrawals to almost $6 billion in February, data compiled by Bloomberg show. A record $139 billion was added to the ETFs in 2013 as the S&P 500 jumped 30 percent for the best annual gain since 1997.

Bull Market

The S&P 500 has rallied more than 6 percent since Feb. 3 as investors speculated that severe winter weather explains the weakness in reports such as housing and hiring. Fed Chair Janet Yellen said this month that the economy has strengthened enough to withstand stimulus cuts, adding that only a notable change to the outlook would prompt the central bank to slow the pace of tapering.
“The market has done extremely well in February,” Doug Cote, chief market strategist at ING U.S. Investment Management in New York, in a telephone interview. His firm oversees about $200 billion. “2014 is more of a recognition that we’re in a global economic expansion and no longer a recovery.”
Three rounds of stimulus have helped push the S&P 500 173 percent higher from a 12-year low in 2009, including a 3.8 percent gain this month.

Housing, Consumer

Home prices in the U.S. climbed at a slower pace in the year through December, indicating the market is entering a new stage that will help sustain further progress. The S&P/Case-Shiller index of property values in 20 cities rose 13.4 percent from December 2012 after increasing 13.7 percent in the year ended in November, the group said today in New York. It was the first deceleration since June.
A Conference Board report showed a measure of confidence among U.S. consumers fell to 78.1 in February from 79.4 the prior month. The median forecast in a Bloomberg survey of economists called for a reading of 80.
The Chicago Board Options Exchange Volatility Index fell 1.3 percent today to 14.05. The gauge of S&P 500 options known as the VIX is up 2.4 percent this year.
Macy’s climbed 5.2 percent to $55.81. The second-largest U.S. department-store company topped fourth-quarter profit estimates after recording a smaller-than-projected charge for a cost-cutting program.

Home Depot

Home Depot advanced 3.1 percent to $80.32. The largest U.S. home-improvement chain has postedsix straight years of meeting or exceeding projections as the U.S. housing rebound spurs spending on renovations. The company also raised its quarterly dividend by 21 percent to 47 cents a share.
Tesla climbed 16 percent to $253.01. Morgan Stanley analyst Adam Jonas raised his price target on the electric car maker to $320. Tesla last week posted results that beat analyst estimates and said it is gearing up for further growth with plans to raise Model S sedan production 56 percent this year and to build a battery plant.
LinkedIn Corp. increased 5.8 percent to $211.06. The professional social-networking company is establishing a Chinese-language website that will restrict some content to adhere to state censorship rules, moving to expand in a country where U.S. technology companies have clashed with the government.

Zulily Jumps

Zulily Inc. (ZU) jumped 40 percent to $59.89 after saying it expects first-quarter sales of $225 million to $235 million. The forecast exceeded the $223 million average estimate by analysts. The online retailer also reported fourth-quarter earnings of 10 cents a share, exceeding the 4 cent-average of analysts surveyed by Bloomberg.
InterMune Inc. soared 150 percent to $34.93 after its drug pirfenidone for a fatal lung disease met goals of a study expected to support U.S. approval.
Office Depot dropped 11 percent to $4.75 after reporting an unexpected loss of 3 cents a share in the fourth quarter. Analysts on average had predicted a profit of 3 cents per share.
Staples Inc. dropped 2.7 percent to $13.03.
Tenet lost 11 percent to $43.21. Earnings before interest, taxes, depreciation and amortization may be $1.8 billion to $1.9 billion this year, the company said in a statement. Analysts anticipated $1.96 billion, the average of 18 estimates compiled by Bloomberg.
RealPage Inc. plunged 23 percent to $15.90. The property-services company reported fourth-quarter earnings of 16 cents a share, missing the 17-cent median of analyst estimates compiled by Bloomberg. RealPage also acquired the assets of Bookt LLC, which owns the vacation-rental booking website InstaManager.
To contact the reporters on this story: Lu Wang in New York at lwang8@bloomberg.net; Callie Bost in New York at cbost2@bloomberg.net
To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net