U.S. stocks were little changed, after the best week this year for the Standard & Poor’s 500 Index, as investors awaited further indications on the strength of the world’s biggest economy from corporate earnings reports.
Equities traded in a narrow range for a second session after the S&P 500 gained in eight of the previous nine days. Energy companies declined, after the group ended on Friday its longest rally in six years. Eli Lilly & Co. fell 8 percent after saying it will stop developing an experimental cholesterol drug after clinical trials disappointed.
The S&P 500 gained 0.1 percent to 2,015.95 at 12:02 p.m. in New York, after rising 3.3 percent last week. The Dow Jones Industrial Average gained 42.69 points, or 0.3 percent, to 17,127.18. The Nasdaq Composite Index climbed 0.2 percent. Trading in S&P 500 companies was about 16 percent below the 30-day average for this time of day amid the Columbus Day federal holiday.
Profits at S&P 500 companies are projected to have fallen 7.2 percent in the third quarter, with energy and materials companies showing the steepest drop, according to analyst forecasts compiled by Bloomberg. Alcoa unofficially kicked off the reporting season on Oct. 8, with sales and profit missing estimates. Some 35 S&P 500 companies are scheduled to report results this week, including Johnson & Johnson, Intel Corp. and JPMorgan Chase & Co.
Investors are also listening for further hints on the Federal Reserve’s policy intentions. Fed Vice Chairman Stanley Fischer said the U.S. economy may be strong enough to merit an interest-rate increase by the end of 2015, while noting that policy makers are also considering slower job growth
and international developments. Fischer spoke at the annual meeting of the International Monetary Fund in Lima on Sunday.
Fed Bank of Atlanta President Dennis Lockhart, speaking Monday to a group of economists in Orlando, Florida, repeated his view that he backs the first rate increase since 2006 by the end of the year. Chicago Fed’s Charles Evans today also reiterated his view that a later liftoff may be the best policy as inflation struggles to gain traction.
The S&P 500 closed Friday at its highest level since Aug. 20, capping its best week in 2015 after Fed meeting minutes showed caution over raising interest rates even as the economy improves. That helped push expectations for an increase further into next year. Traders are now pricing in about a 39 percent chance of a rate liftoff in December, with a 62 percent probability of a March raise.
Concerns over a China-led slowdown in international growth and the central bank’s decision last month to not raise borrowing costs jolted investors, with the S&P 500 losing 5.7 percent in the eight days following the meeting. The benchmark has rallied 5 percent in October as it rebounds from the worst quarter since 2011.
The Chicago Board Options Exchange Volatility Index fell 2.6 percent to 16.63. The measure of market turbulence known as the VIX is on track for a 10-day slide, the longest streak in six years.
Among the S&P 500’s main industries, energy and raw-materials retreated at least 1.1 percent to slip for a second day. The two have led the benchmark higher this month with gains of at least 9 percent. Utilities and consumer stocks were the best performers, with power companies headed for a seven-week high.
Source : Bloomberg