S&P Misses Record High, Stocks Pare Losses
NEW YORK (TheStreet) -- S&P 500 failed to reach a record high closing, but stocks pared losses to close near the flatline as U.S. housing demand outpaced supply and worries about Cyprus lost steam.
"It's really just been the recent consideration that [Cyprus] is an isolated case," Jeffrey Sica, chief investment officer at Sica Wealth Management, said about the late rise in stocks. "Throughout the afternoon there were a handful of rumors ... that the banks were going to open on time, banks were going to open tomorrow and that this was going to be an isolated case."
The S&P 500 closed down 0.06% to 1,562.85 near its all-time high of 1,565 set in October 2007.
Shares of Dollar General (DG) dropped 2.4% to $50.95 after the discount retailer announced it would sell 30 million shares in an underwritten secondary public offering, with backing by KKR & Co. (KKR).The Dow Jones Industrial Average lost 0.23% to 14,526.16 while the Nasdaq gained 0.12% to 3,256.52. The National Association of Realtors reported that pending home sales fell more than expected by 0.4% in February on the back of a downwardly revised 3.8% rise in January; economists were expecting a 0.2% fall. The group said sales dipped last month on constrained inventory that gave buyers limited choices on homes to purchase. "Only new home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels," Lawrence Yun, the association's chief economist, said in a statement. "Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market." Apple (AAPL) tumbled 1.96% to $452.08 after the tech giant appeared in a Shanghai court in a lawsuit brought forth by Shanghai's Zhizhen Network Technology, which accuses the company of infringing on its patents for voice recognition software in Apple's Siri feature. Michael Gayed, chief investment strategist of Pension Partners, LLC in New York, NY, said in an email that the market is at risk of a bigger pullback as uncertainties about the future of the Eurozone continue to go unresolved. "There have been major disconnects in the market since late January, and it appears internally concerns have been building due specifically to Europe," said Gayed. "If the continued collapse in Italy and Spain eventually filters through to global risk-off sentiment, the honey-badger stock market which has not cared about headline risk will be in trouble." "Treasuries are showing clear fear," he added. "It is only a question of when, not if, that fear filters down to stocks." The benchmark 10-year Treasury was surging by 19/32, diluting the yield to 1.85%. The dollar was rising 0.46%, according to the U.S. dollar index. The FTSE in London dropped 0.18% on Wednesday and the DAX in Germany fell 1.15%. May crude oil futures settled up 24 cents to $96.58 on the New York Mercantile Exchange. Fears about the stability of the Eurozone remain escalated after the harsh bailout terms imposed on the tiny island of Cyprus. Attention has turned once again to Italy, where five-year borrowing costs have soared to its highest level since October 2012, when the Eurozone reassured the markets that it would step in to buy bonds of troubled nations that required assistance. Western Digital ( WDC ) shares advanced 3% to $50.14 after the maker of hard drives and home-entertainment devices was initiated with an "outperform" and a price target of $55 Tuesday night by RBC Capital analyst Amit Daryanani, who noted that Western should see higher and more stable gross margins amid a sharp consolidation in the drive industry and stronger enterprise storage demand driven by a surge in data usage. He said that the company should be able to maintain its $1 billion a year in share buybacks. SAIC Inc. (SAI) shares gained 3.9% to $13.32 after the security and communications technology provider declared a special dividend of $1 a share, payable on June 28 and posted fourth-quarter profit on Tuesday of $186 million, or 54 cents a share, a swing from a year-earlier loss of $161 million, or 49 cents a share. Analysts were looking for fourth-quarter earnings of 52 cents a share. Cliffs Natural Resources (CLF) plunged 13.9% to $18.46 after Morgan Stanley cut its view on the iron ore and metallurgical coal producer to "underweight" from "equal weight" and slashed its target price for Cliffs to $14 from $36. Credit Suisse meanwhile lowered its target price on Cliffs to $10 from $30. Both firms said they were concerned that systemic changes in Cliff's key Great Lakes market will compromise its pricing powers and hurt the bottom line of its U.S. iron ore business. Written by Andrea Tse and Joe Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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