U.S. stocks fluctuated early today, after benchmark indexes closed at all-time highs Monday, as data showing the economy expanded more than previously forecast in the third quarter was offset by a drop in consumer confidence.
The Standard & Poor’s 500 Index lost 0.06 percent to 2,064.75 at 11:50 a.m. in New York. The Russell 2000 Index of smaller companies dropped 0.2 percent. The Dow Jones industrial average rose 12.44 to 17,830.34. The Nasdaq 100 Index gained 0.2 percent as Apple Inc.’s market capitalization topped $700 billion. Trading in S&P 500 companies was 18 percent below the 30-day average for this time of the day.
“Some of the economic numbers like GDP looked good, but I don’t know how sustainable they are,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “We need more gains and more activity to sustain that. Consumer confidence was off modestly, and that may be a bit of a catalyst to the downside.”
Gross domestic product, the value of all goods and services produced, rose at a 3.9 percent annualized rate, up from an initial estimate of 3.5 percent, Commerce Department figures showed today in Washington. The median forecast of 81 economists surveyed by Bloomberg called for a 3.3 percent gain. After the 4.6 percent increase in the second quarter, it marked the biggest back-to-back advance since late 2003.
The Conference Board’s consumer confidence index fell to 88.7 in November from 94.1 a month earlier, the New York-based private research group said today. The median forecast in a Bloomberg survey called for a gain to 96.
“Sentiment is probably optimistic, but cautious,” Erik Wytenus, a Palm Beach, Florida-based global investment specialist at J.P. Morgan Private Bank, said by phone. The division oversees $1.052 trillion in client assets. “Part of the reason for that is that stocks have had a powerful run. The thing I’m encouraged about is the strength in the consumer sector.”
The S&P 500 has rallied 11 percent from its low last month as data signaled the U.S. economy is improving, European Central Bank President Mario Draghi pledged to raise inflation as fast as possible, and China unexpectedly cut interest rates.
The Russell 2000 climbed 2.5 percent over the previous three sessions, recovering all of its losses for this month. The index dropped as much as 2.4 percent through Nov. 19. It has now surged 13 percent from a one-year low reached in October.
The rally in American equities has pushed stock valuations to the highest since the end of 2009. The S&P 500 trades at 17.2 times the projected earnings of its members, up from a multiple of 15.5 last month. Profit for S&P 500 companies may rise 7.6 percent this year, estimates compiled by Bloomberg show.
Hewlett-Packard Co. and Tiffany & Co. are among S&P 500 companies reporting earnings today. Of those members that have already reported, 79 percent have beaten earnings projections while 60 percent have beaten sales estimates, according to data compiled by Bloomberg.
Tiffany, the world’s second-largest luxury jewelry retailer, rose 1.8 percent after higher-than-projected sales in the Americas helped make up for a slowdown in Asia last quarter.
Apple, already the world’s largest company by market capitalization, hit a new record value. Shares of the iPhone maker rose as much as 1 percent to $119.75, giving it a valuation of more than $700 billion, a milestone that no other U.S. company has reached.
That puts Apple at 1.7 times the capitalization of the world’s second-biggest company, Exxon Mobil Corp. Exxon, which has lost about $43 billion during the five-month oil rout, has a capitalization of $405 billion.