U.S. stocks slip before corporate earnings reports, Fed meeting

A file picture of traders working on the floor of the New York Stock Exchange. PHOTO: AFP
A file picture of traders working on the floor of the New York Stock Exchange. PHOTO: AFP

NEW YORK (BLOOMBERG) - U.S. stocks slipped, as investors assessed recent gains before the latest batch of earnings and a Federal Reserve meeting, with the Standard & Poor's 500 Index near a nine-week high.

Apple Inc. declined 2.6 per cent after its best week in a year, as sales and the outlook at supplier Dialog Semiconductor Plc missed analysts' estimates. Apple is Dialog's biggest customer. Energy companies fell for a second day, following oil lower.

The S&P 500 fell 0.4 per cent to 2,066.64 at 10:04 a.m. in New York, after last week erasing its losses for the year. The Dow Jones Industrial Average lost 28.26 points, or 0.2 per cent, to 17,618.44. The Nasdaq Composite Index slipped 0.3 per cent.

"Nobody is expecting the Fed to move, but everyone's going to be looking at the language on whether they say they're still on target for this year so the markets might be muted until then," said Thomas Garcia, head of equity trading at Thornburg Investment Management Inc. in Santa Fe, New Mexico, said by phone.

"There are some pretty big earnings this week so people will be watching what companies say about third quarter but also what they say about guidance."

A report on Monday showed purchases of new homes slumped in September to a 10-month low, disrupting a trend of steady improvement this year in the industry. Sales dropped 11.5 per cent to a 468,000 annualized pace and the prior two months were revised lower, Commerce Department figures showed. The September rate, which included a record per centage decline in the Northeast, was weaker than all economists' forecasts in a Bloomberg survey.

Broadcom Corp., Pfizer Inc., Ford Motor Co. and Apple Inc. are among more than 160 S&P 500 companies reporting earnings this week. Analysts project profits at the index's members dropped 6.1 per cent in the third quarter, with energy and materials companies showing the steepest decline.

Two months after the first correction since 2011 broke a yearlong calm in U.S. equities, the S&P 500 is on the march again, bringing its gain from its August low to about 11 per cent, and within 3 per cent of its all-time high set in May. Microsoft Corp., Google parent Alphabet Inc. and Amazon.com Inc. surged on Friday, adding more than $80 billion in combined market value on strong earnings reports.

The main U.S. stock gauge is on track for its best month in four years, led by commodities producers and technology shares, the very groups that fueled the August selloff amid worries that a slowdown in China would hamper global growth.

Equities were also boosted Friday after China cut interest rates for the sixth time in a year. That came a day after the European Central Bank signaled it will bolster stimulus if needed. Investors will look to the Fed's meeting this week for indications of the trajectory of U.S. interest rates. The probability of a rate increase this month is now only 6 per cent, and about 36 per cent for December. March is the first month for which traders price in at least even odds of a boost.