U.S. stocks fluctuated early Thursday, with the Standard & Poor’s 500 Index heading for its biggest monthly drop in a year, as investors scrutinized earnings amid concern over the impact of plunging oil and a stronger dollar while energy companies slid for a third straight day.
Qualcomm Inc. tumbled 11 percent after cutting its 2015 forecast for revenue and profit. Alibaba Group Holding Ltd. slid 9.3 percent after reporting worse-than-forecast profit. Energy companies fell 1.1 percent as a group. Coach Inc. rose 6 percent as earnings beat estimates. McDonald’s Corp. added 4.4 percent after naming a new chief executive officer.
The S&P 500 fell less than 1.32 percent to 2,000.82 at 12:43 p.m. in New York, trading below its average price for the past 100 days. The gauge is down 2.8 percent for January. The Dow Jones Industrial Average rose 37.84 points, or 0.22 percent, to 17,229.21. Trading in S&P 500 companies was 33 percent above the 30-day average for this time of the day.
“Earnings season is in full force and lackluster numbers on top-line as well as bottom line are strong indications that the U.S. dollar as well as the U.S. economy is not showing signs of great ebullience,” Chad Morganlander, a money manager at St. Louis-based Stifel, Nicolaus & Co., which oversees about $160 billion, said in a phone interview. “Many investors are trying to understand the negative feedback loop of the strong dollar and the implications to U.S. earnings as well as revenue growth.”
A renewed vow of patience on interest rates by the Federal Reserve on Wednesday couldn’t prevent the biggest two-day selloff in the Dow in a year, as the impact of plunging oil and a stronger dollar are showing signs of eroding profit at multinational companies.
The Dow tumbled 2.8 percent over two days as companies from Procter & Gamble Co. to DuPont Co. and Pfizer Inc. cited the greenback’s strength as a major headwind for profits. The strongest dollar in a decade is making American goods and services more expensive overseas, eroding sales.
Google Inc., Visa Inc. and Amazon.com Inc. are among 52 S&P 500 companies scheduled to post results on Thursday. Of those that have reported profit so far, 76 percent have exceeded estimates, while 57 percent topped sales projections, according to data compiled by Bloomberg.
Three rounds of Fed bond-buying have helped U.S. equities nearly triple during a six-year bull market. The Fed in its statement Wednesday boosted its assessment of the economy and downplayed low inflation readings in its latest policy statement, even as it acknowledged global risks.
“The thing that’s changed through most of last year was the sense that the Fed was behind the markets and people didn’t really worry about fundamentals,” Bruce McCain, who helps oversee more than $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said by phone. “Now that the training wheels are off, people are looking more at the fundamentals, which are mixed enough not to confirm current valuations.”
Data on Thursday showed contracts to purchase previously owned U.S. homes unexpectedly fell in December by the most in a year, a sign the industry’s recovery remains uneven. The index of pending sales dropped 3.7 percent after a 0.6 percent gain the prior month that was smaller than initially estimated, figures from the National Association of Realtors showed.
A separate report showed the fewest Americans in almost 15 years filed applications for unemployment benefits during a holiday-shortened week. Jobless claims plunged by 43,000 to 265,000 in the week ended Jan. 24, the lowest since April 2000.
Qualcomm sank 11 percent after saying sales for fiscal 2015 probably won’t exceed $28 billion, lower than its previous forecast. The biggest maker of mobile-phone chips also cut profit estimates amid higher competition in China and lost semiconductor orders at a major customer.
Alibaba Group Holding Ltd. tumbled 9.3 percent, the most ever. The operator of China’s biggest online marketplace said third-quarter revenue was $4.22 billion. That fell short of the $4.42 billion estimated by analysts.
Yahoo Inc., which plans to spin off its stake in Alibaba, slipped 6 percent.
McDonald’s added 4.5 percent. The world’s largest restaurant chain appointed Steve Easterbrook as its next CEO, as it grapples with declining sales and earnings. Easterbrook, currently its chief brand officer, will succeed Don Thompson on March 1.
Apple Inc. climbed 1.7 percent. The world’s biggest company on Wednesday jumped 5.7 percent, the most in nine months, after reporting a record quarterly profit of $18 billion.