NEW YORK (BLOOMBERG) - U.S. stocks fluctuated, after the Nasdaq 100 Index hit a 15-year high, as investors assessed whether the economy and corporate earnings are strong enough to support further gains.
Monday's rally lifted the Standard & Poor's 500 Index to the highest level since China's surprise currency devaluation roiled global markets. While the current earnings season is turning out better than expected, analysts predict the fourth quarter will deliver a third straight contraction in profits. Attention is reverting back to the prospects for higher interest rates, with clues expected from speeches tomorrow by key Federal Reserve figures and Friday's government jobs report.
The S&P 500 declined 0.1 per cent to 2,101.72 at 9:41 a.m. in New York (9.41 pm Singapore time), trimming an earlier 0.3 per cent slide, after rising 1.2 per cent yesterday. The Dow Jones Industrial Average added 10.89 points, or 0.1 per cent, to 17,839.65. The Nasdaq 100 retreated 0.2 per cent from its highest since March 2000.
"Investors are sticking to safety at this point in case things take a turn for the worse on the economic front," said Nick Ford, a fund manager who helps manage the equivalent of $3.7 billion at Miton Group in London. "The next few weeks of economic data are going to be very important in terms of working out what goes on from here."
The Nasdaq 100 Index yesterday became the first major U.S. stocks index to retake a multiyear high established earlier in 2015. The S&P 500 rose to its highest level since Aug. 10 - the day before China's surprise devaluation of its currency, and the Dow erased its loss for the year.
As the Fed boosted prospects of an interest-rate increase last month, investors continue to look to data to gauge whether the world's largest economy can withstand higher borrowing costs. A report today will show the decline in factory orders slowed in September, according to economist forecasts. Traders are pricing in a 52 per cent chance of liftoff at the Fed's December meeting.
Fed Chair Janet Yellen, Vice Chair Stanley Fischer and New York Fed's William Dudley are all scheduled to deliver remarks on Wednesday.
Investors will also look to earnings for a read on the health of the economy. Time Warner Inc., Allergan Plc and Facebook Inc. are among more than 100 S&P 500 companies releasing results this week. Of those that have reported this season, about 74 per cent exceeded profit projections, while 55 per cent missed sales forecasts. Analysts now estimate earnings dropped 3.9 per cent in the third quarter, up from predictions for a 6.1 per cent decline a week earlier.