Exxon Mobil Corp. (XOM) gained 1.4 percent after oil rose for a third day as U.S. inventories declined the most in a decade. Gauges of utility, consumer staples and health-care companies in the S&P 500 added at least 0.7 percent. Bank of America Corp. advanced 1.2 percent after agreeing to a record $335 million fair-lending settlement. (BAC) Oracle plunged 12 percent, the most since 2002, as sales and profit missed analysts’ projections.
The S&P 500 increased 0.2 percent to 1,243.72 at 4 p.m. New York time, after dropping as much as 1 percent earlier. The Dow Jones Industrial Average gained 4.16 points, or less than 0.1 percent, to 12,107.74 today. The Nasdaq Composite Index slumped 1 percent to 2,577.97. About 6.6 billion shares changed hands on U.S. exchanges, or 17 percent below the three-month average.
“You have a tug-of-war between the bulls and the bears,” Wasif Latif, vice president of equity investments at USAA Investment Management Co. in San Antonio, which oversees about $50 billion, said in a telephone interview. “The bulls are saying it doesn’t matter if we get any kind of event in Europe, you’ll have the U.S. economy holding a bit better. That’s providing some floor. The ceiling is the fear that we could still see an event in Europe.”
The S&P 500 swung (SPX) between gains and losses today, following yesterday’s 3 percent rally. It has fallen as much as 19 percent from this year’s high on concern about Europe’s crisis. Since Oct. 3, it has risen 13 percent on better-than-estimated U.S. economic data and steps taken by Europe to tame the crisis.
ECB Loans
Earlier today, U.S. stocks followed Europe’s shares lower as banks sought more funds from the European Central Bank than economists predicted, reducing optimism that the debt crisis will be contained. Oracle’s tumble dragged technology, the largest group in the S&P 500, down 2 percent. Stocks rebounded in the final hour of trading as nine out of 10 groups in the S&P 500 rallied.
Energy shares contributed the most for the gain in the S&P 500 today. Exxon Mobil added 1.4 percent to $83.12. Chevron Corp. (CVX) increased 1.7 percent to $105.43.
Gauges of companies least-tied to economic growth outperformed the S&P 500. Constellation Energy Group Inc. (CEG) gained 2.9 percent to $39.60 as the U.S. Justice Department agreed to let Exelon Corp. carry out its $7.9 billion acquisition of the utility company on condition that Exelon sell three electricity- generating plants in Maryland. Supervalu Inc. (SVU) added 3.2 percent to $7.99. Tenet Healthcare Corp. (THC) gained 4.5 percent to $4.88.
Record Settlement
An index of financial shares (S5FINL) in the S&P 500 increased 0.6 percent, rebounding from a 0.9 percent drop. Bank of America rose 1.2 percent to $5.23 after agreeing to a record $335 million settlement of a Justice Department probe into fair- lending lapses at its Countrywide Financial Corp. mortgage unit.
Nike Inc. (NKE) rallied 2.9 percent to $96.35. The world’s largest sporting-goods company reported second-quarter profit that topped analysts’ estimates as sales of running shoes surged in North America.
Research In Motion Ltd. (RIM) surged 10 percent to $13.78 after reports Microsoft Corp. (MSFT) and Nokia Oyj (NOK1V) mulled a bid while Amazon.com Inc. (AMZN) also considered buying the BlackBerry maker.
RIM “turned down takeover overtures” from Amazon because it wanted to fix shortcomings independently, Reuters reported yesterday. A Wall Street Journal article said Microsoft and Nokia “flirted with the idea of making a joint bid” in recent months. Both publications cited unidentified people familiar with the respective matters.
Oracle Plunges
Oracle plunged 12 percent to $25.77. Business-software companies are taking longer to close deals as companies gird for slow economic growth in the U.S. and the possibility of a recession in Europe next year, said Rick Sherlund, an analyst at Nomura Holdings Inc.
“The question is: Are negative headlines on the European situation starting to affect decision making and will that jeopardize the recovery?” Kevin Shacknofsky, who helps manage about $5 billion for Alpine Mutual Funds in New York, said in a telephone interview. “The key thing about the weakness in Oracle is that people were delaying making decisions investing in technology. There’s a lot of work to do to solve the European crisis. With sentiment as weak as it is, it’s a big problem.”
International Business Machines Corp. (IBM), the biggest computer-services company, slipped 3.1 percent to $181.47. Hewlett-Packard Co. (HPQ), the largest computer maker, slid 1.8 percent to $25.44. Cisco Systems Inc. (CSCO), the world’s biggest maker of networking equipment, dropped 2.6 percent to $17.92.
Emerson, KB Home (KBH)
Emerson Electric Co. (EMR) declined 5.4 percent, the most since Sept. 30, to $46.97 after reporting November orders today that were lower than analysts’ estimates.
KB Home lost 6.7 percent to $7.22. The Los Angeles-based homebuilder that targets first-time buyers reported a decline in quarterly profit and weaker gross margins.
Anyone expecting the so-called January effect to turn shares of smaller U.S. companies into market leaders may end up waiting in vain, according to Steven G. DeSanctis, a strategist at Bank of America Merrill Lynch.
“We do not think we will see a January effect occur in the remainder of this month or next month,” DeSanctis wrote yesterday in a report.
Smaller companies have only kept pace with larger ones since the end of October. In past years, they rallied during the period in anticipation of further gains in January. Price swings linked to concern that the U.S. and European economies are faltering explain why the effect is unlikely to surface, according to DeSanctis, a small-cap stock specialist.
In January, small caps beat large caps 73 percent of the time since 1926, according to his analysis of figures from the University of Chicago’s Center for Research in Security Prices. The percentage is the highest for any month of the year. Small caps also had their best monthly performance in January, with an average gain of 4 percent, DeSanctis wrote.
To contact the reporter on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
http://www.bloomberg.com/news/2011-12-21/u-s-stock-index-futures-rise-as-ecb-eases-squeeze-in-bank-funds.html
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