By Rita Nazareth - Jan 20, 2012 10:23 PM GMT+0700
Jan. 20 (Bloomberg) -- David Kostin, chief U.S. equity strategist at Goldman Sachs Group Inc., talks about the outlook for corporate earnings, U.S. stocks and investor sentiment. Kostin speaks with Erik Schatzker and Scarlet Fu on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
Jan. 20 (Bloomberg) -- Keith Wirtz, chief investment officer at Fifth Third Asset Management, talks about strategy for financial and insurance stocks, and market outlook. Wirtz speaks with Betty Liu and Matt Miller on Bloomberg Television's "In the Loop." (Source: Bloomberg)
U.S. stocks were little changed, following a three-day rally in the Standard & Poor’s 500 Index, as Google Inc. and General Electric Co. fell on quarterly results while International Business Machines Corp. rallied.
Google, owner of the world’s most popular Internet search engine, slumped 7.8 percent as revenue and profit missed analysts’ estimates. American Express Co. (AXP), the largest credit- card issuer by purchases, and GE slid more than 1.7 percent as sales trailed forecasts. Microsoft (MSFT) Corp. and IBM (IBM) advanced at least 3.5 percent as results exceeded projections.
The S&P 500 lost 0.2 percent to 1,311.66 at 10:21 a.m. New York time. The gauge was on pace for a third week of gains, the longest winning streak since October. The Dow Jones Industrial Average rose 46.05 points, or 0.4 percent, to 12,670.03.
“Very mixed still best describes fourth quarter earnings reports,” Peter Boockvar, equity strategist at Miller Tabak & Co. in New York, wrote in a note. “Measured against what’s been seen over the past few years where companies beat estimates 70-75 percent of the time, it’s downright disappointing as only about half are exceeding expectations. The game of ‘Beat the Numbers’ is just expectations management and thus nonsense.”
S&P 500 companies, which beat profit estimates in the previous 11 quarters, probably will report a 4.6 percent increase in per-share earnings during the September-December period, analysts’ estimates compiled by Bloomberg show. Of the 51 companies in the S&P 500 that reported results since Jan. 9, 33 posted per-share earnings that beat projections, according to data compiled by Bloomberg.
Economic Data
Sales (ETSLTOTL) of previously owned U.S. homes rose for a third month in December to the highest level since January 2011, a sign the housing market ended last year with momentum. Greek officials and private creditors entered a third day of negotiations on a debt swap deal that’s crucial to lowering the country’s borrowings and freeing up a second round of international aid.
Google tumbled 7.8 percent to $589.57. Chief Executive Officer Larry Page is moving into new markets to ignite growth outside Google’s traditional search-based business. That effort contributed to an 8 percent drop in the average price Google gets when users click an ad, because it charges less for ads on mobile devices and in emerging markets, said Herman Leung, an analyst at Susquehanna Financial Group.
GE (GE) fell 1.7 percent to $18.83. Revenue dropped 8 percent to $38 billion from $41.2 billion a year earlier, including the sale of NBC Universal. That’s lower than the average estimate of $40 billion from 10 analysts surveyed by Bloomberg.
American Express
American Express lost 2.5 percent to $49.70. The company reported fourth quarter revenue of $7.74 billion, missing the average analyst projection of $7.9 billion, data compiled by Bloomberg show. Profit excluding some items beat analysts’ estimates as card spending reached a record.
Capital One Financial Corp. (COF) slumped 7.5 percent to $45.14. The credit-card issuer seeking approval to purchase ING Groep NV’s U.S. online bank said fourth-quarter profit fell 42 percent as expenses rose.
Fifth Third Bancorp (FITB) sank 3.8 percent to $13.04. Ohio’s largest lender reported fourth-quarter sales of $1.46 billion, missing the average analyst estimate of $1.52 billion, data compiled by Bloomberg show.
IBM gained 3.6 percent to $187 after forecasting 2012 earnings that beat analysts’ estimates as fourth-quarter profit rose 4.4 percent because of rising software demand.
Microsoft added 3.5 percent to $29.11. The company’s Xbox business got a boost from Christmas shoppers, who snapped up its video-game consoles and Kinect sensor controllers, and signed up for the Xbox Live online service.
Intel, Schlumberger
Intel Corp. (INTC) increased 0.6 percent to $25.79. The chipmaker predicted first-quarter revenue that may top analysts’ estimates, signaling that the shortage of disk drives that throttled personal computer production may be ending.
Schlumberger Ltd. (SLB) rose 2.4 percent to $74.60. The world’s largest oilfield-services provider said fourth-quarter profit rose 36 percent as higher crude prices pushed oil companies to boost exploration and production spending around the world.
U.S. stocks are caught in “a vicious circle” of slower trading and bigger swings in prices, according to Pierre Lapointe, Brockhouse & Cooper Inc.’s global macro strategist. Trading for the 50 days ended yesterday was the slowest since at least 2008, when Bloomberg started compiling the data, at 6.67 billion shares a day.
Similar averages for companies in the S&P 500 and the Dow declined this week to the lowest levels since 1999 and 2000, respectively, according to Bloomberg’s figures. They reflect trading totals for each stock on the New York Stock Exchange (MVOLNE) or Nasdaq Stock Market, depending on where it’s listed.
“Getting in or out of a stock causes more price variation” because fewer shares are trading, Lapointe and Alex Bellefleur, a financial economist, wrote yesterday in a report from their Montreal-based firm. “This increases volatility.”
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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