U.S. stocks erased losses as Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and a majority of the region’s leaders support issuing a joint bond, offsetting earlier concern about a Chinese slowdown.
A measure of financial shares in the Standard & Poor’s 500 Index gained, while technology and industrial companies retreated. Hewlett-Packard Co. (HPQ) rose 3.3 percent after the largest personal-computer maker announced plans to slice its workforce by 27,000 and reported quarterly sales and earnings that topped estimates. Tiffany & Co. (TIF) tumbled 6.8 percent as the luxury jewelry retailer cut its profit and sales forecasts.
Traders work at the New York Stock Exchange (NYSE) in New York on May 24, 2012. Photographer: Scott Eells/Bloomberg
May 24 (Bloomberg) -- Bloomberg's Deborah Kostroun reports on the performance of the U.S. equity market today. U.S. stocks erased losses as Italian Prime Minister Mario Monti said Greece is likely to stay in the euro and a majority of the region’s leaders support issuing a joint bond, offsetting earlier concern about a Chinese slowdown. (Source: Bloomberg)
May 24 (Bloomberg) -- Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission and a Bloomberg LP board member, talks about Facebook Inc.'s initial public offering and the potential impact on U.S. investor sentiment. Levitt speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
The S&P 500 rose 0.1 percent to 1,320.68 at 4 p.m. New York time, reversing a loss of 0.6 percent. The index gained for a fourth day. The Dow Jones Industrial Average added 33.60 points, or 0.3 percent, to 12,529.75. The Nasdaq Composite Index (CCMP) fell 0.4 percent to 2,839.38. About 6.9 billion shares changed hands on U.S. exchanges, almost in line with the three-month average.
“The market has come down not necessarily because growth has slowed so significantly, but because of a potential disorderly unwind of the euro,” said Dan Veru, who oversees $3.7 billion as chief investment officer of Palisade Capital Management LLC in Fort Lee, New Jersey. “Greece won’t come out of the euro. There’s no mechanism in place to do that.”
Equities reversed losses as Monti said in an interview on Italian television station La7 today that “Europe can have euro bonds soon.” Italy can help push Germany to support the idea of collective debt and to embrace the “common good” of Europe, he said. Stocks dropped earlier as three officials said China’s biggest banks may fall short of loan targets for the first time in at least seven years amid an economic slowdown.
Economic Data
In the U.S., data showed companies placed fewer orders for computers, machinery and other capital equipment in April for a second month. Manufacturing in the U.S. expanded in May at the slowest pace in three months, indicating the industry that’s spurred the expansion is cooling.
Concern about a slowdown in global growth and a worsening of Europe’s debt crisis drove the S&P 500 down 5.5 percent so far this month. Financial, energy and technology shares have tumbled at least 7.7 percent in May.
Hewlett-Packard rose 3.3 percent to $21.77. The 8 percent workforce reduction, taking place through firings and early retirement offers, will generate annual savings of as much as $3.5 billion starting in 2014.
Facebook Inc. (FB) added 3.2 percent to $33.03, gaining for a second day. The social networking company is still trading below its initial public offering price of $38.
Airlines Rally
The Bloomberg U.S. Airlines Index (BUSAIRL) climbed 4.9 percent after JPMorgan Chase & Co. raised industry estimates, citing lower jet-fuel prices. Southwest Airlines Co. (LUV) jumped 4.6 percent, the biggest gain in the S&P 500, to $8.74. US Airways Group Inc. (LCC) surged 11 percent to $12.16.
Dow Chemical Co. (DOW) rallied 3.4 percent to $31.55. The chemical maker said an arbitration panel ruled that Kuwait must pay $2.16 billion in damages after it canceled a 2008 agreement to buy a stake in the company’s plastics business.
Pandora Media Inc. (P) surged 12 percent to $11.60. The Internet radio pioneer rose the most since its first day of trading in June 2011 after first-quarter results exceeded analysts’ estimates on higher mobile advertising sales.
Technology had the biggest decline among 10 groups in the S&P 500, dropping 0.9 percent. Apple Inc. (AAPL), the most valuable company, lost 0.9 percent to $565.32.
NetApp Tumbles
NetApp Inc. (NTAP) plunged 12 percent, the most in the S&P 500, to $28.82. The seller of hardware and software for storing data forecast first-quarter earnings trailing analysts’ estimates amid a weak economic outlook.
Tiffany tumbled 6.8 percent to $57.59. Chief Executive Officer Michael Kowalski said sales in the Americas region “underperformed, continuing a soft trend that began in the last quarter of 2011.” Sales in the first quarter rose 3 percent to $386 million in the Americas and declined 4 percent in the New York flagship store.
MEMC Electronic Materials Inc. (WFR) lost 6 percent to $1.58. The second-largest U.S. maker of polysilicon dropped after S&P cut its corporate credit rating two levels to B+ from BB.
The slump in the S&P 500 may be nearing an end after the measure dropped below its 150-day average, which may lure buyers into the market, said Oppenheimer & Co. The gauge slipped 8.7 percent between April 2 and May 18, falling below its average price from the prior 150 days on May 17 for the first time since Dec. 19, according to data compiled by Bloomberg.
150-Day Average
Oppenheimer’s Carter Worth wrote in a May 21 report that declines to the 150-day average may prompt pessimists to stop selling and persuade investors who missed out on the market’s rally through April to buy.
The S&P 500 is “down to a level where rebound potential is high and that the right thing to do now is to put some money to work on the long side,” Worth, the New York-based chief market technician at Oppenheimer, wrote in the May 21 report. The stock index rose 1.8 percent this week through yesterday.
Worth highlighted 90 stocks to buy that are down to levels where “selling pressure is judged likely to abate.” The list included Berkshire Hathaway Inc. (BRK/B), Intel Corp. (INTC), Microsoft Corp. (MSFT) and Starbucks Corp. (SBUX)
“If and as these names stop going down (read: stabilize) and actually start to rebound, one can make inferences about the current market correction being at an end,” Worth wrote in the report.
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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