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U.S. Stocks Fluctuate as Investors Weigh Earnings, Fed Stimulus

July 23, 2013

July 23 (Bloomberg) -- U.S. stocks fluctuated, after the Standard & Poor’s 500 Index extended a record yesterday, as investors weighed corporate earnings amid speculation on when the Federal Reserve may scale back its asset purchases.

Travelers Cos. sank 3.3 percent after posting the biggest quarterly decline since 2008 in a key measure of the company’s value as higher interest rates pressured its bond portfolio. Netflix Inc. dropped 3.8 percent amid slower-than-expected subscriber gains. Texas Instruments Inc. climbed 4.1 percent after forecasting sales and profit that may exceed estimates.

The S&P 500 slid less than 0.1 percent to 1,694.89 at 1:49 p.m. in New York. The Dow Jones Industrial Average gained 41.77 points, or 0.3 percent, to 15,587.32. Trading in S&P 500 stocks was 4.4 percent below the 30-day average during this time of day.

"What you’re seeing is revenues are coming in pretty lackluster and profits seem to be doing a little better than gains in sales," Hank Herrmann, Overland Park, Kansas-based chief executive officer of Waddell & Reed Investment Management Co., said by phone. His firm manages $104 billion. "The market had a period of digesting the confusion over Fed tapering. For the moment, it’s focused on individual company fundamentals."

The S&P 500 extended a record yesterday, adding to a rally from last week after Fed Chairman Ben S. Bernanke said the central bank remains flexible about the duration of its asset- purchase program. Fed stimulus has helped fuel a surge in stocks worldwide, with the S&P 500 jumping as much as 151 percent from its March 2009 low.


Manufacturing Data


The benchmark equity gauge erased earlier gains of as much as 0.2 percent today after the Richmond Fed’s gauge of manufacturing in the mid-Atlantic region unexpectedly fell in July. The factory index slid to minus 11. Readings greater than zero signal expansion in the area that includes the Carolinas, the District of Columbia, Maryland, Virginia and West Virginia. The median projection in a Bloomberg survey of economists called for a reading of 9.

Investors have been weighing data to determine the timing and pace of any stimulus reduction by the Fed. Half of the economists in a July 18-22 Bloomberg survey expect the central bank to trim at its September meeting the pace of its monthly bond buying to $65 billion from the current $85 billion. That’s up from 44 percent in last month’s poll.


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