Stocks Finish Flat as Earnings Wind Down

NEW YORK ( TheStreet) -- Major U.S. stock averages finished flat Monday as upbeat retail sales numbers took some pressure off stimulus wind-down concerns.

The S&P 500 finished unchanged at 1,633.77.

Theravance ( THRX) surged 18% to $41.20 after the company and Elan ( ELN) reached a $1 billion agreement in which Elan will buy 21% of royalties that Theravance receives from GlaxoSmithKline ( GSK) for four respiratory drugs.

Mosaic ( MOS ) slumped 3.13% to $61.30 after the fertilizer producer said that the final two million tons of its potash expansion strategy is being deferred, pending its wait for market conditions to improve.

First Solar ( FSLR ) rose 2.29% to $50.47. The solar-energy company reported last Monday a swing to first-quarter profit of 66 cents a share.

J.C. Penney ( JCP) advanced nearly 3% to $18.24 after Cleveland Research analysts reported that the department store operator's sales and traffic significantly increased in May thanks to more aggressive promotions.

Investors on Monday were still processing a Wall Street Journal report that said Federal Reserve officials have come up with a way to wind down its unprecedented $85 billion-a-month bond-buying program to stimulate the economy. A timeline for the program was not yet revealed.

Meanwhile the Census Bureau reported that retail sales rose 0.1% in April after falling by a revised 0.5% in March, setting up for a decent start to the second the quarter on consumer spending, a major factor behind U.S. economic growth. Economists, on average, were expecting retail sales to fall 0.3% in April.

"Households have persisted with a solid pace of spending despite the tax increases faced at the start of the year," noted New York-based Barclays economist Peter Newland.

The Census Bureau followed the retail sales numbers with a report showing that business inventories were unchanged in March, the same as in February after downward revisions to last month's data. This was driven by a sharp, 0.5% draw in retail inventories, spearheaded by auto dealers, furniture, electronics and apparel stores. Economists were forecasting a 0.3% increase.

The Dow Jones Industrial Average was off 0.18% to 15,091.68. The Nasdaq was up 0.06% to 3,438.79.

June gold futures shed $2.30 to $1,434.30 an ounce. June light sweet crude oil futures retreated 87 cents to $95.17 a barrel.

Chinese markets settled lower Monday after the country's industrial output rose only mildly in April and fell short on expectations. A modest increase in April retail sales also contributed to worries about a feeble economic recovery in China. The country also reported that its fixed-asset investment unexpectedly decelerated in April.

Earnings season has all but concluded, with 452 of the S&P 500 companies having reported. Bank of America analysts write that misses have been punished more than beats have been rewarded this season. Companies that beat on both EPS and sales outperformed the S&P 500 by just 0.8 percentage points in the five days following the reporting, while those that missed on both underperformed by 2.2 percentage points. The analysts noted that this compares to the historical outperformance of 2 percentage points and underperformance of 2.5 percentage points.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

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