U.S. Stocks Fluctuate Amid Earnings After Dow Tops Record

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U.S. Stocks FluctuateU.S. stocks fluctuated, after the Dow Jones Industrial Average closed at a record, as investors assessed corporate earnings and speculated on the timing of any reduction to Federal Reserve stimulus.

News Corp. (NWSA) dropped 2.3 percent as the publisher of the Wall Street Journal reported a decline in revenue. T-Mobile US (TMUS) Inc. retreated 2.2 percent after offering almost $1.8 billion in new stock. Dish Network Corp. rose 4.5 percent as the second-largest U.S. satellite-television provider’s earnings exceeded estimates.

The Standard & Poor’s 500 Index fell 0.1 percent to 1,769.89 at 11:36 a.m. in New York after closing within a point of its all-time high. The Dow lost 17.49 points, or 0.1 percent, to 15,765.51. Trading volume was 7.7 percent below the 30-day average at this time of day.

“A lot of U.S. financial firms will start to close their books for the year now after this decent performance,” said Ioan Smith, a market strategist at KCG Europe Ltd. In London. “If you’ve had good returns and you outperformed, how much more are you going to get this year? There is a big argument to lock in what gains you’ve got given the risk-reward is not conducive of any significant gains from these levels.”

The S&P 500 and the Dow Jones Industrial Average have touched records this quarter as the Fed refrained from curbing its $85 billion in monthly asset purchases, while better-than-forecast data and corporate earnings indicate the economy may be strong enough to withstand less stimulus.

Data Watch

Investors will scrutinize economic reports this week on jobless-benefit claims and manufacturing in the New York area. Data last week showed the U.S. economy grew faster than forecast in the third quarter and hiring rose more than estimated in October. There was no data yesterday and the U.S. Treasury markets were closed for the Veterans Day holiday.

Tapering “could very well take place” next month, Fed Bank of Atlanta President Dennis Lockhart said today on Bloomberg Radio. Lockhart, who has backed the Fed’s stimulus program and does not vote on policy this year, said “confidence” in the economy is “key” in any decision to cut bond purchases.

Economists forecast the Fed will delay tapering asset purchases until the March 18-19 meeting. Policy makers will probably pare the monthly pace of bond buying to $70 billion at that time, according to the median of 32 estimates in a Bloomberg survey Nov. 8. The group next meets Dec. 17-18.

“Less Crutch”

“The jobs report last week was a lot stronger than anyone anticipated, so that could have some bearing on the taper,” Richard Sichel, chief investment officer at Philadelphia Trust Co., said by phone. He helps oversee $1.9 billion. “But they’re looking for more data than a one-time number. We don’t think the taper will be too soon. Once the taper starts investors should think of it that the economy can actually gain steam on its own with less of a crutch.”

Investors may get some insight into Fed thinking when Vice Chairman Janet Yellen testifies before the Senate Banking Committee Nov. 14 during her confirmation hearing to succeed Ben S. Bernanke as chairman.

The Fed support has helped propel the S&P 500 higher by more than 160 percent from its March 2009 low. The gauge has rallied 24 percent so far in 2013, poised for its best year in a decade, and is trading at 16 times projected earnings, more than the five-year average of 14 times earnings, according to data compiled by Bloomberg.

“Taking a Breather”

“After such a strong rally I’m hearing calls for a correction,” Patrick Spencer, London-based head of U.S. equity sales at Robert W. Baird & Co., said in a phone interview today. “A lot of investors are taking a breather and everywhere you look I am reading different reasons why this rally can’t last.”

In China, top Communist Party party officials concluded a four-day meeting today to map out a blueprint for reform. China will deepen economic reforms and give markets a bigger role in allocating resources, the official Xinhua News Agency reported today, citing a communique from the gathering.

Some 13 members of the S&P 500 report earnings today. Seventy-four percent of the 450 companies that have released results so far have beaten analysts’ estimates, according to data compiled by Bloomberg.

“Earnings have been reasonable and the outlook for corporate growth next year is decent,” Spencer said. “The market traditionally goes up in November and December. I am reasonably optimistic and still believe equities are the place to be.”

Volatility Gauge

The Chicago Board Options Exchange Volatility Index (VIX), which measures future volatility signaled by S&P 500 options, rose 1.5 percent to 12.72.

Six of 10 main S&P 500 groups retreated, with utility and financial stocks sliding at least 0.5 percent to pace losses. Media stocks fell 0.9 percent, the most among 24 S&P industries.

News Corp. slid 2.3 percent to $17.02 as the publisher reported a 2.8 percent decline in first-quarter revenue, hurt by shrinking demand for print advertising. The news division, which owns papers in the U.S., the U.K. and Australia, saw revenue fall 10 percent to $1.5 billion.

T-Mobile US dropped 2.2 percent to $26.38. The fourth-largest mobile-phone carrier in the U.S. plans to sell 66.2 million shares in a secondary offering, raising money that could be used to acquire wireless spectrum.

The company said it may buy spectrum from other parties or through government auctions. Airwaves have become increasingly valuable as carriers struggle to handle the flood of Internet traffic on smartphones and other devices.

Intel Cable

Liberty Global Plc, the European cable operator owned by John Malone, fell 1.9 percent to $77.98. The company is in talks to acquire Intel Corp.’s online pay-TV service under development, according to three people with knowledge of the situation. Malone would use Intel’s system outside the U.S., said one of the people, who asked not to be identified because the talks are private.

Dean Foods Co. fell 7.2 percent to $18.30 after the company lowered its full year earnings forecast. Dallas-based Dean said dairy commodity prices remain high, creating a more challenging environment than previously thought. The milk producer also said it will start paying a dividend of 7 cents in the first quarter.

Hologic Inc. sank 14 percent to $19.66, the biggest drop since May 2009. The X-ray company’s 2014 forecasts for sales and adjusted revenues fell short of analysts’ estimates as the company sees “headwinds.” At least three research firms cut Hologic’s stock to the equivalent of a hold rating.

Cancer Treatment

Sarepta Therapeutics Inc. plunged 60 percent to $14.63. U.S. regulators indicated more data may be needed before the company files a new drug application for its experimental treatment for Duchenne muscular dystrophy. Sarepta has no products on the market. The stock had climbed 42 percent this year through yesterday.

Dish Network climbed 4.5 percent to $49.63, the highest since October 2000. The satellite-television provider reported third-quarter profit that exceeded estimates after luring more customers away from cable companies.

Dendreon Corp. (DNDN) jumped 3 percent to $2.58 after the developer of cancer treatments reported a third-quarter loss and product sales that missed analysts’ estimates. The company also plans to cut jobs as part of a restructuring program aimed at cutting cash operating expenses by about 20 percent.

D.R. Horton Inc. rose 2.2 percent to $18.46. The largest U.S. homebuilder by revenue reported a higher quarterly profit as it increased prices amid a nationwide housing recovery.

Airline Rally

The Bloomberg U.S. Airlines Index rallied 3 percent to the highest since April 2007. Delta Air Lines Inc. rose 2.2 percent to $28.07 and Southwest Airlines Co. gained 2.9 percent to $18.32. Carriers are benefiting as jet fuel prices retreat from an eight-month high against diesel amid rising output and the lowest seasonal demand in more than two decades.

US Airways Group Inc. rose as much as 9.5 percent to $25.49 before trading in the stock was halted pending news. The carrier and American Airlines reached a settlement with federal regulators in the U.S. lawsuit seeking to block their $17.2 billion merger, a person familiar with the matter said.

A deal with the Justice Department will be announced today, the person said. AMR rose 27 percent to $12.10 in over-the-counter trading.