NEW YORK (TheStreet) - Markets finished little changed on Monday as investors await the latest decisions by the policy-making arm of the Federal Reserve, which is scheduled to begin two days of meetings tomorrow.
"It's just kind of a ho-hum day, but that's not a bad thing all the time just given the run we've had recently," Matt McGeary, portfolio manager at Eagle Asset Management, said in a phone interview. "You can't be up 1% every day." McGeary said Eagle Asset, which has $29.8 billion in assets under management, has viewed this quarter as a "reasonably good" earnings season.
Apple (AAPL) shares tacked on 0.74% to $529.88 ahead of the company's quarter earnings announcement after the closing bell, injecting some strength in the markets following disappointing quarterly reports from U.S. drug maker Merck (MRK) and on factory output and pending home sales. Merck lost 2.6% to close at $45.35 after missing revenue expectations. Sales fell 4 percent to $11 billion due to a foreign currency exchange hit and patent expirations. Consensus expectations were for $11.12 billion in revenue.
"Markets are overbought after a good run and investors are still nervous about earnings," Raymond James chief investment strategist Jeffrey Saut said in a phone interview. But he noted about 64% of S&P/500 companies had beaten earnings expectations and suggested investors would pay little attention to economic reports in the coming six weeks due to the one-off impact from the partial government shutdown. Saut helps oversee $400 billion in assets.
For the third quarter, analysts on average are expecting S&P 500 earnings to increase 4.5% year-over-year, with EPS of $27.23, Christine Short, a senior manager at S&P Capital IQ, wrote in a daily report. Short's note also shows that analysts are anticipating that nine sectors will post earnings growth in the third quarter, with the telecom and consumer discretionary sectors leading the growth at 27.48% and 12.28% respectively. The sector expected to become biggest laggard of this quarter is energy, with a contraction of 7.49%.
Guidance for the fourth quarter has been provided by 57 companies. Of those companies, 45 are negative in their guidance, 8 are positive and 4 are in-line, according to Short.
In company news, JCPenney (JCP) was the largest gainer in the S&P 500 after the company announced that it sees positive comparable store sales for the third and fourth quarter of 2013. Shares of the department store company jumped 8.8% to close at $7.39.
Shares of Roper Industries (ROP) sank the most in the S&P after the Sarasota, Fla.-based company reduced its 2013 earnings per share to $5.57 to $5.63 from $5.72 to $5.86 on slower-than-anticipated fourth-quarter growth in energy and select other markets. Shares sank 6.6% to $124.26.
Drug maker Dendreon (DNDN) shares surged 11.1% to $2.81 after reports it was seeking buyers. Disappointing sales of its prostate-cancer treatment were said to be a contributor to the decision to sell.
Pending home sales saw their biggest slump in more than three years during September, falling 5.6% to an index reading of 101.6 the National Association of Realtors said Monday. Rates for mortgages are at two-year highs, dampening consumer demand.
Factory output was also lackluster, rising 0.1 percent last month, the Federal Reserve said Monday. This was below expectations for a 0.3 percent rise in September, illustrating a disruption to manufacturing before the partial government shutdown.
The New York Stock Exchange said its test run of Twitter's initial public offering on Saturday was a success, as the exchange looks to avoid the technical problems that marred Facebook's FB IPO. Twitter is expected to go public sometime before Thanksgiving. The IPO is expected to be largest IPO of a technology company since Facebook went public in May 2012.
The benchmark 10-year Treasury was off 1/32, raising the yield to 2.52%. The dollar was up 0.16% to $79.34 according to the U.S. dollar index. December oil added 83 cents to close at $98.68, while gold futures slipped 30 cents to settle at $1,352.20 an ounce.
--By Jane Searle, Andrea Tse and Joe Deaux in New York