Bloomberg News

S&P 500 Erases Advance as Apple’s Plunge Offsets Banks

July 25, 2012

U.S. Stocks Advance as Caterpillar, Boeing Rally on Earnings

Caterpillar Inc., the largest maker of construction and mining equipment, and Boeing gained at least 2.6 percent today. Photographer: Chris Ratcliffe/Bloomberg

The Standard & Poor’s 500 Index (SPX) retreated for a fourth straight day as disappointing results at Apple Inc. (AAPL:US) and an unexpected decline in new home sales overshadowed a rally in banks and industrial shares.

Apple fell 4.2 percent as iPhone sales missed projections. Netflix Inc. (NFLX:US) tumbled 25 percent after the video-subscription service raised doubts on user growth. A measure of homebuilders in S&P indexes retreated 3 percent. JPMorgan Chase & Co. (JPM:US) and Citigroup Inc. (C:US) advanced at least 1.2 percent. Nasdaq OMX Group Inc. jumped 4.1 percent, the most since November, after reporting earnings that beat estimates. Caterpillar Inc. (CAT:US) gained 1.4 percent as the company raised its profit forecast.

The S&P 500 slid 0.1 percent to 1,337.46 at 3:33 p.m. New York time. The benchmark gauge has lost 2.8 percent in four days. The Dow Jones Industrial Average rose 54.60 points, or 0.4 percent, to 12,671.92. The Nasdaq Composite Index lost 0.4 percent to 2,852.25. Trading in S&P 500 companies was up 14 percent from the 30-day average at this time of day.

“There’s a huge amount of uncertainty out there,” said Rob McIver, co-portfolio manager at Jensen Investment Management in Lake Oswego, Oregon. His firm manages $5.5 billion. “It’s a somewhat anemic U.S. recovery. You have the eurozone blowing up again. And you see that starting to be reflected in corporate results. It’s certainly a difficult environment for investors.”

Data showed demand for new U.S. homes unexpectedly dropped in June from a two-year high, indicating the housing recovery will be uneven. Earnings at 71 percent of the 196 S&P 500 companies which reported second-quarter results have beaten analysts’ estimates, according to data compiled by Bloomberg.

Busiest Week

U.S. initial public offerings are set for their busiest week since March as purveyors of steak, burritos and antivirus software strive to go to market before investor optimism wears off.

Del Frisco’s Restaurant Group Inc. (DFRG:US), Chuy’s Holdings Inc., Avast Software NV and five other companies are attempting to raise as much as $923 million, data compiled by Bloomberg show. That would be the most since the week of March 26, when nine companies went public, including foodmaker Annie’s Inc. and industrial-components maker Rexnord Corp.

The IPOs come on the heels of sales last week by Palo Alto Networks Inc. (PANW:US), Kayak Software Corp. (KYAK:US) and teen retailer Five Below Inc. (FIVE:US), which surged on their first trading days. Tex-Mex restaurant chain Chuy’s raised $75.8 million on July 23 and jumped 16 percent in its debut, giving further impetus to this week’s sellers even as concerns persist over Europe’s debt crisis and the economic recovery in the U.S., said James Investment Research Inc.’s Tom Mangan.

“There’s nothing like someone else’s success to encourage you to take that leap as well,” said Mangan, who helps oversee $3.4 billion at the Xenia, Ohio-based firm. “There’s some urgency on the part of people who want to proceed with an IPO because they’re afraid of what might happen later in the year.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editor responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net


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Companies Mentioned

  • AAPL
    (Apple Inc)
    • $101.66 USD
    • 0.23
    • 0.23%
  • NFLX
    (Netflix Inc)
    • $476.55 USD
    • -5.01
    • -1.05%
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