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| U.S. Stocks Fluctuate After GDP, Consumer, Manufacturing Data |
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| By Rita Nazareth |
Jul 31, 2010 12:02 AM GMT+0800 |
U.S. stocks swung between gains and losses as the Standard & Poor’s 500 Index headed for a weekly decline after improving data on consumer confidence and business activity tempered concern the economic rebound is slowing.
Merck & Co. lost 2 percent, the most in the Dow Jones Industrial Average, after revenue at the drugmaker missed the average analyst estimate. MEMC Electronic Materials Inc. sank 17 percent after the maker of silicon wafers reported less profit than forecast. MetLife Inc. climbed 3.9 percent as the biggest U.S. life insurer topped income projections.
The S&P 500 fell 0.1 percent to 1,100.69 at 11:54 a.m. New York time, giving it a 0.2 percent slump since July 23, after the expansion in U.S. gross domestic product trailed economists’ forecasts. The Dow retreated 5.07 points, or 0.1 percent, to 10,462.09. Equities pared losses after reports on consumer sentiment and business activity.
“The top line GDP number was disappointing,” said Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, which oversees $550 billion. “Corporate earnings are pretty good and companies feel good about it because they’re building new plants and investing in equipment.”
The S&P 500 has climbed 6.8 percent in July, the biggest monthly advance in a year, after more than 77 percent of companies in the index exceeded the average analyst profit estimate since July 12, data compiled by Bloomberg show. Earnings will rise 35 percent for the entire measure this year, the most since 1988, analyst forecasts show. Following the 2001 recession, income growth never exceeded 20 percent.
Economic Growth
The S&P 500 fell as much as 1.2 percent today after a report showed growth in the U.S. economy slowed to a 2.4 percent annual rate in the second quarter, less than the 2.6 percent median forecast in a Bloomberg survey of economists, reflecting a larger trade deficit and cooler consumer spending.
Consumer spending, which accounts for about 70 percent of the economy, rose at a 1.6 percent pace last quarter, compared with a 1.9 percent rate the previous three months that was smaller than previously estimated, today’s report showed. Job gains have been slow to take hold, curbing household purchases.
“The memories of a bear market linger for a very long time,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said today in a Bloomberg radio interview. “We still have 9 percent-plus unemployment. I have my doubts whether consumer spending is going to pick up here at all.”
Consumer Confidence
Stocks trimmed losses after the Thomson Reuters/University of Michigan final index of consumer sentiment showed a decline to 67.8 in July from 76 a month earlier. The preliminary measure was 66.5. The index was forecast to drop to 67 from the previous month, according to the median of 58 projections in a Bloomberg News survey.
The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 62.3 this month, more than the median forecast of economists surveyed by Bloomberg News, after 59.1 in June. Figures greater than 50 signal expansion.
“There’s enough economic growth and solid earnings to boost stocks,” said Michael Strauss, who helps oversee about $25 billion at Commonfund in Wilton Connecticut. “The manufacturing sector is showing a lot of strength. The risks of a double-dip are very low.”
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Source:
Bloomberg
Post Date:
7/31/2010 1:29:10 AM
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