By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Salesforce.com jumps on earnings beat; energy stocks sell
off
NEW YORK (MarketWatch) -- Small-cap companies outperformed large
firms Thursday, as downbeat economic reports and selling pressure
from the energy sector weighed on the benchmark S&P 500.
The Russell 2000 (RUT) an index that measures the performance of
small-cap companies, also outperformed large-cap stocks and scored
its eighth record close this year. The small-cap index added 3.9
points, or 0.3%, to 1,239.00.
Meanwhile, the S&P 500 (SPX) closed down 3.12 points, or
0.2% lower, at 2,110.74, while six of its 10 main sectors finished
with losses. A 5.5% drop in oil prices prompted investors to dump
energy companies.
The Dow Jones Industrial Average (DJI) closed off 10.15 points
at 18,214.42, stepping back from the record level reached on
Wednesday.
The Nasdaq Composite (RIXF) defied the general trend and rose
20.75 points, or 0.4%, to 4,987.89, only 12 points shy of
5,000.
In economic news, data showed that the inflation trend turned
negative
(http://www.marketwatch.com/story/consumer-inflation-trend-turns-negative-for-first-time-since-2009-2015-02-26)
for the first time since 2009, thanks to cheaper gasoline prices,
in part. However, core consumer prices, excluding food and energy
costs, inched up.
Persistent disinflation could complicate the Federal Reserve's
desire to begin normalizing interest rates sometime this year.
However, Federal Reserve Chairwoman Janet Yellen in her testimony
to Congress on Tuesday said inflation is likely to move higher
toward the 2% target after initially declining due to a drastic
plunge in oil prices.
First-time weekly jobless claims
(http://www.marketwatch.com/story/jobless-claims-surge-31000-to-313000-2015-02-26)
jumped more than expected, coming in above 300,000. However, the
four-week average trend is still below that number. Meanwhile
durable-goods orders
(http://www.marketwatch.com/story/durable-goods-orders-rise-in-january-2015-02-26)were
higher than expected.
Recent record levels on the main indexes prompted some analysts
to sound alarms, calling the market overvalued.
Albert Edwards, chief global strategist at Société Générale, and
a notoriously bearish strategist, pointed to a deteriorating
economic picture and a growing disconnect between the stock market
and economic reports, in a note to investors Thursday.
"With equity markets galore hitting record highs clearly I must
be missing something big! We are at that stage in the cycle where I
begin to doubt my own sanity," Edwards wrote.
Other analysts find the economic data positive. Jeff Kravetz,
regional investment strategist at U.S. Bank Wealth Management,
wasn't worried about the latest inflation numbers.
"Inflation moved lower but it is still in the zone of positive
low inflation, which is good for stocks. Another important factor
is the stronger dollar, which will bring more demand from
international investors. Price appreciation in the stock market
will be sustainable because of positive economic backdrop," Kravetz
said.
There are still many risks, such as Greece, Ukraine and Russia
and other geopolitical threats that may result in short-terms
pullbacks, Kravetz noted.
Read: Stock gains are making us dangerously complacent
(http://www.marketwatch.com/story/stock-market-gains-are-making-us-dangerously-complacent-2015-02-25)
Read: Opinion: Company executives are betting on this bull
market
(http://www.marketwatch.com/story/company-executives-are-betting-on-this-bull-market-2015-02-25)
(http://www.marketwatch.com/story/company-executives-are-betting-on-this-bull-market-2015-02-25)Stocks
in focus: Salesforce.com Inc. (CRM) rose 11.72%. Late Wednesday,
the software maker posted strong growth in deferred sales, which
measures its future sales from a subscription-based business
model.
Sears Holdings Corp. (SHLD) shares fell 4.9% after the retailer
posted continuing quarterly sales losses
(http://www.marketwatch.com/story/sears-targets-reit-formation-in-may-or-june-2015-02-26-6485296)
and offered more details on a plan to convert assets into a
real-estate investment trust.
Kohl's (KSS) shares rose 1.1% after the retailer beat profit and
sales estimates and raised its dividend. SeaWorld Entertainment Inc
(http://www.marketwatch.com/story/what-to-expect-from-seaworlds-earnings-2015-02-25).(SEAS)
fell more than 3%after its loss per share was worse than
expected.
Read: Herbalife, J.C. Penney, Kohl's earnings in focus
(http://www.marketwatch.com/story/herbalife-jc-penney-kohls-earnings-in-focus-2015-02-26)
(http://www.marketwatch.com/story/herbalife-jc-penney-kohls-earnings-in-focus-2015-02-26)Other
markets:European stocks
(http://www.marketwatch.com/story/european-stocks-rise-as-german-unemployment-falls-2015-02-26)
got a small lift from news of a fall in German unemployment, while
Japanese stocks
(http://www.marketwatch.com/story/japan-stocks-touch-15-year-high-again-2015-02-26)
once again touched a 15-year high. Gold
(http://www.marketwatch.com/story/gold-puts-janet-yellen-in-rearview-mirror-moves-higher-2015-02-26)(GCJ5)
climbed on Thursday to their highest settlement in more than a
week, settling $8.60, or 0.7%, higher at $1,210.10 an ounce. Oil
(http://www.marketwatch.com/story/oil-gives-back-some-gains-as-investors-weigh-up-supply-2015-02-26)
futures (CLJ5) fell to their lowest level in nearly a month,
settling $2.82, or 5.5% lower at $48,17 a barrel.
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