U.S. Stocks Fluctuate as Energy Shares Rise, Employers Cut Jobs
By Rita Nazareth
March 31 (Bloomberg) -- U.S. stocks swung between gains and losses as rallying commodity companies offset private reports that showed employers unexpectedly cut jobs this month and business activity grew less than forecast.
Chevron Corp. rose 0.9 percent as crude oil climbed above $83 a barrel. Boeing Co. and Home Depot Inc. led declines in the Dow Jones Industrial Average after ADP Employer Services said companies eliminated 23,000 jobs in March, compared with a gain of 40,000 forecast on average by economists in a Bloomberg News survey. Ford Motor Co. slumped on the UAW retiree fund’s plan to raise $1.78 billion from the sale of warrants to buy Ford stock.
The Standard & Poor’s 500 Index increased less than 0.1 percent to 1,173.99 at 12:46 p.m. in New York. The measure has climbed 5.3 percent since Dec. 31, the biggest first-quarter rally since 1998. The Dow fell 12.93 points, or 0.1 percent, to 10,894.49 after closing at an 18-month high yesterday. The Russell 2000 Index of small companies rose 0.3 percent.
“The trend is still positive,” said Michael Strauss, who helps oversee about $25 billion at Commonfund in Wilton, Connecticut. “There’s nervousness today because of the ADP data. There’s also some caution in the air because of the strength of the rally. However, fundamentals are pretty solid.”
Stocks opened lower as the ADP report spurred concern that the job market is not rebounding as strongly as many economists have predicted. The Institute for Supply Management-Chicago Inc. said its business barometer fell to 58.8 from 62.6 in February. Readings greater than 50 signal expansion. The median economist estimate in a survey was 61.
Labor Department
The Labor Department’s nonfarm jobs report on April 2 is forecast to show employers added 180,000 jobs in March, the most in three years, according to the median estimate in a survey of economists.
“The ADP numbers disappointed investors,” said Peter Jankovskis, who helps manage about $1.8 billion as co-chief investment officer at Oakbrook Investments in Lisle, Illinois. “Jobs are key to turn consumer spending into something sustainable. Investors in the stock market will be in a wait- and-see mode.”
Benchmark indexes maintained declines after a Commerce Department report showed factory orders rose for the 10th time in 11 months, increasing a greater-than-forecast 0.6 percent.
The S&P 500 has rallied for the past year on speculation the economy is recovering from the worst contraction since the Great Depression. It’s up 73 percent from a 12-year low in March 2009, while still down 25 percent from its 2007 record.
Market Breadth
The S&P 500 may climb about 4 percent to the 1,220 level after sliding as much as 50 points, according to an indicator of market breadth, said Peter Beuttell, a technical analyst at MTS Research.
“We will see a volatile upward drift towards 1,220 by late April or early May,” London-based Beuttell said in a telephone interview today. “A drop of the order of 30 to 50 points will be part of that.”
Energy shares had the biggest gain in the S&P 500, rising 0.5 percent. Crude oil surged to an 11-week high in New York as the dollar declined against the euro, bolstering investor demand for commodities.
Chevron Corp. and Denbury Resources Inc., which explores for oil and gas primarily in the U.S. Gulf Coast region, advanced at least 0.9 percent.
President Barack Obama said today he will allow oil and natural-gas drilling off the U.S. East Coast and cancel development in Bristol Bay, Alaska. The president proposed permitting exploration in the Atlantic Ocean from Delaware south and, if a congressional moratorium is lifted, in the Gulf of Mexico 125 miles off the west coast of Florida.
Gold Producers
Gold producers also gained after the metal advanced, heading for the sixth straight quarterly gain.
Newmont Mining Corp. and Barrick Gold Corp. advanced at least 1.1 percent.
Mortgage insurers gained after the Washington-based Mortgage Insurance Companies of America said borrowers who caught up on their overdue mortgages outnumbered people who became newly delinquent on insured home loans for the first time in almost four years.
Genworth Financial Inc. and MGIC Investment Corp. gained at least 5.9 percent.
JDS Uniphase Corp. climbed 6.3 percent to $12.74. The maker of phone equipment had its share-price estimate boosted to $18 from $15 by Thomas Weisel Partners LLC.
ArQule Inc. led the gains in the Russell 2000 Index, soaring 97 percent to $6.90. The maker of cancer therapies said its ARQ 197 drug showed positive results in treating patients with advanced, refractory non-small cell lung cancer.
Ford, Boeing
Ford slid 3.7 percent to $12.79. A health-care trust for United Auto Workers retirees from Ford expects to raise about $1.78 billion from the sale of warrants to buy the automaker’s stock, the company said. The offering was priced at $5 a warrant through a modified Dutch auction yesterday, Ford said in a statement today.
Boeing Co. fell 1.1 percent to $72.71. The world’s second- largest commercial-plane maker said it expects to recognize an income tax cost of about $150 million as a result of new legislation reshaping the U.S. health-care system.
AutoNation Inc. sank 3.2 percent to $18.36. The biggest U.S. new car dealer seeks to extend $1.14 billion of loans to delay maturities and increase available cash.
Rite Aid Corp. tumbled 7.4 percent to $1.57. The third- largest U.S. drugstore chain forecast a full-year loss that was wider than analysts predicted after profit on generic drugs decreased.
Biggest Decline
SAIC Inc. had the biggest decline in the S&P 500, dropping 6.4 percent to $17.76. The defense contractor specializing in computer services reduced its full-year earnings forecast after fourth-quarter profit missed analysts’ estimates.
Chiquita Brands International Inc. declined 3.6 percent to $15.91. The seller of bananas and other produce said it expects first-quarter results will be “substantially lower” than a year earlier. Separately, the company announced a joint venture with Groupe Danone SA to market fruit-based drinks.
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