U.S. stocks were little changed, after the Standard & Poor’s 500 Index rose to a five-year high, as banks slumped and China’s inflation grew. The Chicago Board Options Exchange Volatility Index fell to the lowest since 2007.
Banks had the biggest loss among 24 groups in the S&P 500 as Wells Fargo (WFC:US) & Co., the largest U.S. home lender, slid 0.9 percent after margins narrowed and mortgage applications waned. Boeing Co. (BA:US) fell 2.5 percent as U.S. regulators said they will perform a review of the 787 Dreamliner after a fire on a Japan Airlines Co. jet. Best Buy Co. (BBY:US), the consumer-electronics retailer that founder Richard Schulze is trying to take over, rose 16 percent as U.S. sales stabilized in the holiday season.
The S&P 500 was almost unchanged at 1,472.05 at 4 p.m. New York time. The Dow Jones Industrial Average gained 17.21 points, or 0.1 percent, to 13,488.43. About 5.9 billion shares changed hands on U.S. exchanges, or 3.8 percent below the three-month average, according to data compiled by Bloomberg.
“The good news about China is that it is in a trajectory of improvement,” Bruce McCain, chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a phone interview. His firm oversees $20 billion. “The bad news is that it may also boost inflation. In the U.S., people will be focused on earnings. It’s not great yet, but it certainly has the potential for improvement as we get further into the year.”
The CBOE Volatility Index, known as the VIX (VIX), dropped 1 percent to 13.36, the lowest level since June 2007. The gauge lost 3.4 percent for the week, following a 39 percent in the previous week, which was the biggest slump since the gauge’s inception two decades ago.
China’s inflation accelerated more than forecast to a seven-month high as the nation’s coldest winter in 28 years pushed up vegetable prices, a pickup that may limit room for easing to support an economic recovery. The U.S. trade deficit unexpectedly widened in November as American retailers stocked up on imported goods for the holidays and demand for foreign automobiles rebounded following superstorm Sandy.
More than 80 percent of the 27 S&P 500 companies which reported quarterly results beat analysts’ estimates compiled by Bloomberg. Fourth-quarter profits at S&P 500 companies grew 2.5 percent, according to analysts’ estimates compiled by Bloomberg. That would be the second-slowest quarterly growth since 2009, the data show.
Phone, industrial and financial shares had the biggest losses among 10 S&P 500 groups. The KBW Bank Index of 24 stocks slid 0.8 percent. Bank of America Corp. (BAC:US) dropped 1.3 percent to $11.63. Citigroup Inc. (C:US) declined 1.1 percent to $42.34.
Wells Fargo slid 0.9 percent to $35.10. Chief Executive Officer John Stumpf, 59, has used deposits to lower the bank’s cost of funding as it makes more loans, softening the impact of meager yields. The narrower margins have come as the bank takes a bigger share of mortgage and commercial markets while betting on an economic turnaround.
Earnings for financial companies in the S&P 500 grew 16 percent in the fourth-quarter, the second-biggest increase only behind telephone companies’ profits, according to data compiled by Bloomberg. The shares have risen 4.3 percent so far in 2012, compared with a 3.2 percent gain in the benchmark gauge.
Boeing retreated 2.5 percent to $75.16. The review is in addition to a U.S. National Transportation Safety Board probe of the Jan. 7 fire that the agency said caused severe damage to the battery pack area of the 787 after passengers disembarked in Boston following a flight from Tokyo. A couple of jets were grounded last month by a power fault which Boeing said this week it had traced to flaws in power panels.
Corning Inc. (GLW:US) lost 1.5 percent to $12.45. The maker of glass for flat-panel televisions was cut to neutral from buy at Goldman Sachs Group Inc.
J.C. Penney Co. sank 4.7 percent to $18.26 after the department-store chain was cut to sell (JCP:US) from neutral at UBS AG, which said signs of cash flow “distress” will require “significant” changes to the retailer’s turnaround strategy.
3M Co. (MMM:US) declined 0.6 percent to $96.28. The manufacturer of products including Scotch tape and dental braces was cut to underweight from neutral at JPMorgan Chase & Co.
Best Buy climbed 16 percent to $14.21. Sales by domestic stores open at least 14 months were unchanged in the nine weeks ended Jan. 5, the Richfield, Minnesota-based company said today in a statement. Global comparable sales fell 1.4 percent, less than the 2 percent decline projected by analysts Mike Baker at Deutsche Bank AG and Scott Tilghman of B. Riley & Co.
Ford Motor Co. (F:US) rose 1.2 percent to $14. The company plans to hire 2,200 salaried employees in the U.S. this year, the most in more than a decade, in an expansion that shows the strength of the recovery in the second-largest U.S. automaker’s home market.
Chevron Corp. (CVX:US) added 1.1 percent, the second-biggest gain in the Dow, to $111.73. The energy company said earnings increased (CVX:US) from the third quarter as rising prices blunted the impact of declining oil output.
The outline given by the second-largest U.S. oil producer by market value hints at a bright succession of earnings reports when the world’s biggest publicly traded energy producers begin releasing results in coming weeks, said Brian Youngberg, an analyst at Edward Jones & Co. in St. Louis. Chevron is scheduled to report full quarterly results on Feb. 1, as is Exxon Mobil Corp., the largest U.S. energy company.
Dendreon Corp. (DNDN:US) surged 21 percent to $6.17 on optimism more patients will begin taking the company’s prostate cancer drug Provenge. Shares of the drugmaker fell 60 percent in the 12 months through yesterday on concern urologists aren’t making use of the medicine. Discussions with doctors prescribing Provenge show the drug is being used more often, Geoffrey Porges, a Sanford C. Bernstein & Co. analyst, said in a note upgrading Dendreon’s shares to outperform.
Equity mutual funds recorded the second-highest inflows on record in the first week of the year as stocks rallied on signs that the global economy is gaining momentum.
About $22 billion flowed into equity funds around the world, according to data compiled by research firm EPFR Global going back to 1996. Emerging-market equity funds took in the most money on record in the week ended Jan. 9, Morgan Stanley wrote in a report today that cited EPFR data. The MSCI All- Country World Index jumped 3.1 percent in first week of 2013 and the Standard & Poor’s 500 Index reached a five-year high yesterday.
The flows represent a turnaround for investors who have pulled cash from U.S. shares, the world’s biggest equity market, for the past six years. About $150 billion was withdrawn from mutual funds that invest in American stocks in 2012, according to data from Washington-based Investment Company Institute.
The record for equity fund inflows globally was the third week of September 2007, when $23 billion was added, the data show.
To contact the reporters on this story: Rita Nazareth in New York at email@example.com; Sarah Pringle in New York at firstname.lastname@example.org
To contact the editor responsible for this story: Lynn Thomasson at email@example.com