S&P 500 edges higher on rally in energy shares
US stocks erased early losses as investors shook off concerns over the downing of a Russian warplane by Turkish forces, and energy shares rallied for their first back- to-back gains in three weeks.
Commodity companies led a rebound, with raw-materials joining energy to rise the most among the S&P 500's main groups. Airlines slumped along with travel-related shares after a government warning to American travelers abroad coupled with a jump in crude prices.
The Standard & Poor's 500 Index rose 0.1 per cent to 2089.14 at 4pm in New York, after earlier falling as much as 0.8 per cent. The gauge has gone without two straight winning sessions since November 3. The Dow Jones Industrial Average erased a 109-point slide to rise 19.51 points, or 0.1 per cent, to 17,812.19. The Nasdaq Composite Index was little changed. About 6.9 billion shares traded hands on US exchanges, 6.8 per cent below the three-month average.
The Standard & Poor's 500 Index rose 0.1 per cent to 208.54 at 4pm in New York, after earlier falling as much as 0.8 per cent. Richard Drew
"When you see this type of uncertainty happening, it reinforces looking at the US as a safe haven," said Tom Anderson, who helps oversee about $US8 billion as chief investment officer at Boston Private Wealth. "The US economy is in very solid shape. We're pretty positive on equities as a result. But there's certain to be noise and volatility around those events."
Turkey shot down the Russian warplane near the border with northwestern Syria, drawing an angry rebuke from President Vladimir Putin and marking the first direct clash between foreign powers embroiled in the civil war. He said Russia "won't tolerate such crimes" but stopped short of threatening any military response against Turkey, which is a member of the North Atlantic Treaty Organization, warning only of "serious consequences" for bilateral ties.
While global financial markets were jolted by concerns that the situation could escalate, political analysts in Russia and Europe said that seemed unlikely given the risks associated with any conflict between Russia and a NATO member. The incident comes with Brussels on the highest-level terror alert and after the US State Department issued a global alert for Americans.
The geopolitical tensions overshadowed data today that showed the economy expanded at a faster pace in the third quarter than previously reported, bolstering the Federal Reserve's case for raising borrowing costs for the first time since 2006. Traders are now pricing in a 74 per cent probability that the Fed will increase interest rates next month.
A separate report showed home prices climbed more than estimated in September compared to a year earlier, signalling residential real estate is sustaining momentum. Another gauge showed consumer confidence unexpectedly fell in November to the lowest since September 2014.
Stocks struggled to add to an advance following the S&P 500's strongest weekly gain this year, with the gauge little changed from its Friday close. The benchmark is 2 per cent away from its May record after rallying 12 per cent from a summer swoon and its first correction in four years.
The Chicago Board Options Exchange Volatility Index rose 2 per cent Tuesday to 15.93, trimming an earlier 10 per cent rise. The measure of market turbulence known as the VIX fell 23 per cent last week, the most since July.
Six of the S&P 500's 10 main industries advanced, with energy and raw-material companies up the most. Financial, utility and industrial companies were the worst performers.
Energy stocks rose for second day, up 2.2 per cent on higher oil prices. Marathon Oil and Chesapeake Energy added more than 5.5 per cent, while Pioneer Natural Resources rose to a five-month high. Exxon Mobil advanced 2 per cent.
Among raw materials, Newmont Mining gained 2.5 per cent as gold rose for the first time in three sessions amid demand for haven assets. Steelmaker Nucor climbed 3.7 per cent after analysts at BB&T rated the shares a buy. Miner Freeport-McMoRan added 3.8 per cent for its first climb in four sessions as copper rallied.
Analog Devices rallied 6.4 per cent to lead semiconductors in the benchmark index higher after the chipmaker posted better-than-expected earnings. Avago Technologies and Skyworks Solutions gained more than 2.5 per cent.
Dollar Tree's better-than-expected earnings propelled the shares up 6.6 per cent to the highest since 2013. Keurig Green Mountain and Campbell Soup rose more than 3 per cent, though the broader consumer-staples group was little changed. Campbell gained after forecasting full-year profit above analysts' estimates, even as it trimmed its sales outlook.
A group of homebuilding stocks rose 1.4 per cent to the highest level in two months on better-than-expected increases in home prices in September. D.R. Horton, the largest US homebuilder, advanced 1.5 per cent to a level last seen in 2006.
Consumer-discretionary stocks fell amid a slump in travel-related companies. Priceline Group, Expedia and TripAdvisor retreated more than 1.9 per cent, while cruise operators Royal Caribbean Cruises and Carnival also sank at least 1.9 per cent.
Similarly, shares of industrial companies were weighed by a selloff in airline operators. The Bloomberg US Airlines Index slumped 2.7 per cent, its biggest decline in seven weeks, as United Continental Holdings and Delta Air Lines fell at least 3 per cent.
Outside of the travel companies among consumer shares, Signet Jewelers declined 4.1 per cent, the most since February 2014. Its quarterly results missed analysts' estimates and its outlook fell short of some forecasts.
Three of the Internet's biggest names - Google parent Alphabet, Amazon.com and Facebook - fell at least 0.9 per cent. Those shares, along with Priceline and a 1.4 per cent drop in Netflix, dragged the Nasdaq Internet Index down 0.9 per cent after it closed yesterday at a record.
Financial shares fell for a second day, with real-estate companies among the worst performers in the group. Mall owner Simon Property Group lost 2 per cent. SL Green Realty and AvalonBay Communities slipped more than 1.1 per cent.
The earnings season is drawing to a close, with almost all members of the gauge having reported. Of those, 74 per cent beat profit estimates, while only 44 per cent exceeded sales forecasts. Analysts project profits for index members fell 3.8 per cent in the third quarter, compared with expectations for a 7.2 per cent drop at the start of the season.
Bloomberg
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