U.S. stocks were little changed, after yesterday’s decline, as a slump in technology shares tempered signs that a slump in China’s factory output is easing and America’s housing market is improving.
D.R. Horton Inc. (DHI:US) and Toll Brothers Inc. (TOL:US) added at least 1.8 percent to pace gains in homebuilders. Facebook Inc. (FB:US), the biggest social networking site, surged 21 percent after reporting sales that topped analysts’ estimates. Boeing Co. (BA:US) rose 1.3 percent after boosting its full-year forecast for the third time this year. Apple Inc. (AAPL:US) fell 0.1 percent, reversing a rally of as much as 2.2 percent. Netflix Inc. (NFLX:US) plunged 14 percent as it cut its forecast (NFLX:US) for domestic growth.
The Standard & Poor’s 500 Index fell less than 0.1 percent to 1,412.74 at 11:56 a.m. New York time. The Dow Jones Industrial Average increased 12.62 points, or 0.1 percent, to 13,115.15. Trading in S&P 500 companies was about 4.1 percent lower than the 30-day average at this time of day.
“The market was encouraged by signs of stabilization in China, and the better-than-expected home sales data in U.S. suggest that the housing recovery remains in track,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. He spoke in a phone interview. “Yet the market is still struggling, trying to determine the damage in corporate profits growth.”
Equities gained as a survey signaled a smaller contraction in China’s manufacturing. Purchases of new homes in the U.S. rose in September to the highest level in more than two years. The Federal Open Market Committee will conclude a two-day meeting in Washington today and release a statement on policy.
Forty-four companies in the S&P 500 are scheduled to release results today. Earnings at about 70 percent of the index’s companies beat analysts’ estimates, according to data compiled by Bloomberg. Third-quarter sales missed forecasts at 60 percent of companies, according to data compiled by Bloomberg, the data showed.
Concern about a worsening of the earnings picture has sent the S&P 500 (SPX) down 3.6 percent from this year’s high on Sept. 14. The decline has extended its October loss to 2 percent after the index capped four straight months of gains. The benchmark measure is still up 12 percent in 2012 on speculation central bankers will keep economies expanding.
Six out of 10 groups in the S&P 500 rose as financial, health-care and raw material shares had the biggest gains. Technology shares had the biggest declines, losing 0.7 percent. Apple fell 0.1 percent to $612.94. A measure of 11 homebuilders in S&P indexes added 1.3 percent. D.R. Horton advanced 1.8 percent to $21.47. Toll Brothers increased 2.2 percent to $35.30.
Facebook surged 21 percent to $23.55. Ads delivered to people on mobile devices generated about $150 million during the quarter, or 14 percent of all advertising revenue. That compares with about $10 million in the second quarter, according to an estimate by Brian Wieser, an analyst at Pivotal Research Group. The shares were raised to buy from hold at Stifel Nicolaus & Co.
Boeing added 1.3 percent to $73.73. The company also reported quarterly earnings that topped (BA:US) estimates amid higher deliveries of commercial and military aircraft.
Dow Chemical Co. (DOW:US) jumped 6.8 percent to $30.50. The chemical producer reported better-than-expected earnings. Chairman and Chief Executive Officer Andrew Liveris said yesterday he’s cutting jobs and closing plants at the biggest U.S. chemical maker because global economic growth is slowing.
Lockheed Martin Corp. (LMT:US) increased 3 percent to $94.67. The world’s largest defense contractor said third-quarter profit rose 9.3 percent and raised its full-year earnings forecast (LMT:US). The company also projected a decline in 2013 sales.
US Airways Group Inc. (LCC:US) jumped 1.8 percent to $12.31. The carrier that wants to merge with American Airlines said third- quarter profit more than doubled (LCC:US) as passenger traffic increased and the price it paid for jet fuel declined.
Molina Healthcare Inc. (MOH:US) rallied 12 percent to $25.53. The insurer specializing in Medicaid plans for the poor reported a profit on improved results from its biggest market.
Netflix plunged 14 percent to $58.49. The world’s largest online video service cut its forecast for domestic growth and predicted larger losses from international expansion.
Bristol-Myers Squibb Co. (BMY:US) fell 0.9 percent to $32.93. The only drugmaker among the top 12 to decline in trading this year reported sales and earnings trailed analyst estimates after revenue from its top medicine vanished to generic competition.
Eli Lilly & Co. (LLY:US) lost 2.8 percent to $50.48 after reporting third-quarter earnings that missed analyst estimates (LLY:US) after generic competition reduced revenue from the schizophrenia treatment Zyprexa, once the company’s top-selling drug.
Tempur-Pedic International Inc. plunged 21 percent to $25.20. The mattress maker acquiring rival Sealy Corp. cut its 2012 profit forecast amid increased U.S. competition and weakening sales in Europe.
Brinker International Inc. (EAT:US) sank 9.8 percent to $30.17. The owner of the Chili’s and Maggiano’s dining chains forecast profit that was less than analysts estimated.
Two New York Times Co. (NYT:US) option trades pushed bearish wagers to the highest level ever (NYT:US) after the publisher of the third- biggest U.S. newspaper by weekday circulation rallied to a 20- month peak.
The ratio of outstanding puts (NYT:US) to sell the stock versus calls increased almost 30-fold in two days to 4.1-to-1 on Oct. 22, an all-time high, according to data compiled by Bloomberg. A block of 8,500 January $10 puts changed hands that day after 10,000 traded at the end of last week, the data show. Times Co.’s shares climbed (NYT:US) 37 percent this year through yesterday and touched its highest price since February 2011 last week.
“The stock has had a nice run which you may want to hedge,” Boniface “Buzz” Zaino, a money manager at Royce & Associates LLC in New York, said yesterday via phone. His firm manages about $36 billion including shares of the publisher. “You could get a near-term bearish case based on concerns about the economy for the next six months and what’s going to happen to advertising dollars.”
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