Wall St little changed after data, Fed minutes on tap
NEW YORK, Feb 20 — US stocks were little changed today after housing and inflation data pointed to a continuation of modest economic improvement and ahead of the minutes from the Federal Open Market Committee’s January meeting later in the session.
Groundbreaking to build new US homes fell 8.5 per cent in January but new permits for construction rose to a 4 1/2-year high while producer prices rose in January for the first time in four months.
The data should enable the Fed to maintain its easy monetary policy in its efforts to stimulate the economy.
Later in the session, investors will look to the minutes from the Fed’s January meeting for any indication as to how long the current monetary policy will remain in effect.
“It’s hard in any given data point to take a strong conclusion that we are moving dramatically forward, but over time, clearly things are getting better,” said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts.
Lutts described an economy that was addicted to stimulus.
“The bottom line is the economy is on heroin today and we will at one time move to a diluted form of heroin, but it’s very important for people to remember we are still on an unbelievably aggressive, never-seen-before accommodative policy and this economy is going to improve.”
The S&P 500 is up more than 7 per cent for the year, fueled by legislators’ ability to sidestep an automatic implementation of spending cuts on tax hikes on January 1, better-than-expected corporate earnings and modestly improving economic data that has been tepid enough for the Fed to maintain its stimulus policy.
The Dow Jones industrial average dropped 5.99 points, or 0.04 per cent, to 14,029.68. The Standard & Poor’s 500 Index lost 2.60 points, or 0.17 per cent, to 1,528.34. The Nasdaq Composite Index shed 3.12 points, or 0.10 per cent, to 3,210.48.
US oil and gas producer Devon Energy Corp reported a fourth-quarter loss as it wrote down the value of its assets by US$896 million due to weak gas prices. Shares dipped 1.6 per cent to US$59.60
OfficeMax Inc and Office Depot Inc shares were halted as the companies announced a merger agreement. An earlier online statement of the deal was pulled down as an agreement had not yet been struck.
Toll Brothers Inc lost 4 per cent to US$35.43 after the largest luxury homebuilder in the United States, reported first-quarter results well below analysts’ estimates.
SodaStream dropped 3.2 per cent to US$50.79 after the seller of home carbonated drink maker machines posted fourth-quarter earnings and provided a 2013 outlook.
According to Thomson Reuters data through Tuesday morning, of the 391 companies in the S&P 500 that have reported results, 70.1 per cent have exceeded analysts’ expectations, compared with a 62 per cent average since 1994 and 65 per cent over the past four quarters.
Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.6 per cent, according to the data, above a 1.9 per cent forecast at the start of the earnings season. — Reuters