Pullback hits Wall Street after recent run-up

 

NEW YORK: US stocks fell last week, halting a two-week advance, as a worsening outlook for technology company earnings added to concern that the eight-month rally in equities outpaced the prospects for economic growth.

Stocks also slid as yields on Treasury three-month bills turned negative for the first time since financial markets froze last year.

The Standard & Poor's 500 Index lost 0.2 per cent last week to 1,091.38 after gaining 5.5 per cent in the first two weeks of November. The Dow average added 47.69 points, or 0.5 per cent, to 10,318.16 for the week.

"It is normal for stocks to pull back after such a strong run," said Lawrence Creatura, a Rochester, New York-based money manager at Federated Investors Inc, which oversees US$390 billion (US$1 = RM3.40). "It's reasonable for investors to take a pause when they're faced with such a broad variety of uncertainties."

"If the economy is turning, which it is, industrials and materials should continue to do better," said David Katz, who oversees US$1.2 billion at Matrix Asset Advisors in New York. "Materials might be the better gainer because of their gold exposure."

About 80 per cent of S&P 500 companies that have reported third-quarter results beat analysts' predictions, including Sears Holdings Corp, Ltd. Brands Inc and GameStop Corp last week. That exceeds the record pace of 72.3 per cent for the period ended in June, data compiled by Bloomberg show.

Hewlett-Packard Co and Deere & Co are among 10 companies in the S&P 500 scheduled to report results this week. A report will probably show sales of existing US homes increased in October to the highest level in more than two years, spurred in part by a tax credit that lured first-time buyers, according to the median estimate of economists surveyed by Bloomberg.

Exchanges will be closed on Thursday for the Thanksgiving holiday and trading will end at 1pm New York time the next day. - Bloomberg