NEW YORK - The Standard & Poor’s 500 index notched another record close Monday by a tiny margin as good news from J.C. Penney helped offset disappointing earnings from several U.S. companies.
The S&P 500 rose 2.34 points, or 0.1 percent, to 1,762.11. The Dow Jones industrial average edged down 1.35 points, or less than 0.1 percent, to 15,568.93. The Nasdaq composite closed down 3.23 points, or 0.1 percent, at 3,940.13.
J.C. Penney was the biggest gainer in the S&P 500 after the retailer’s chief executive said sales were improving. Merck shares fell after the drugmaker sharply lowered its earnings forecast for the year and reported a drop in third-quarter earnings. Roper Industries, a medical and industrial equipment manufacturer, dropped after lowering its full-year earnings estimate.
The S&P 500 has closed at an all-time high six times this month. The index was spurred earlier in the month by a deal in Washington that ended a partial government shutdown and prevented a potential default on the U.S. government’s debt. Stocks have also climbed because companies have been able to keep increasing their earnings even as the economy stayed flat.
Earnings are expected to rise by about 4.5 percent at S&P 500 companies, according to data from S&P Capital IQ. While that is the slowest rate of growth in a year, companies are still beating the estimates of Wall Street analysts. About two-thirds of the companies that have published third-quarter earnings so far have exceeded analysts’ expectations.
“Earnings are beating a low bar,” said Russ Koesterich, chief investment strategist at BlackRock. “You have an economy that’s not producing a lot of top-line growth, but it’s allowing margins to remain elevated for longer than people thought.”
J.C. Penney, which is trying to recover from a botched corporate makeover led by its former chief executive officer, rose 60 cents, or 8.8 percent, to $7.39. The stock is still down 63 percent this year.
Merck fell $1.19, or 2.6 percent, to $45.35 after reporting that its third-quarter profit plunged 35 percent. Roper Industries fell $8.78, or 2.6 percent, to $124.26 after the company’s earnings fell short of estimates. Roper also cut its earnings forecast.
Homebuilders fell after the number of Americans who signed contracts to buy previously owned homes fell in September to the lowest level in nine months, reflecting higher mortgage rates and home prices. D.R. Horton dropped 11 cents, or 0.6percent, to $19.66. KB Home fell 22 cents, or 1.2 percent, to $17.68.
Stocks have been supported this year by ongoing economic stimulus from the Federal Reserve. This week, investors will get more insight into the central bank’s thinking.
Analysts don’t expect to see any big changes come out of a meeting of Fed policymakers this week. The Fed is currently buying $85 billion in bonds every month to help keep down long-term interest rates and to encourage borrowing, spending and hiring.
“The Fed is not likely to surprise the markets at this week’s meeting, by any means,” said Michael Sheldon, the chief market strategist at RDM Financial. “For now, it’s steady as she goes.”
In commodities trading, the price of gold edged down 30 cents to close at $1,352.20 an ounce. Oil rose 83 cents, or 0.8 percent, to $98.68 a barrel.
Business, Pages 24 on 10/29/2013