The Dow and S&P 500 edged higher yesterday after stronger-than-expected retail data, though tech heavyweight Apple dragged on the market for a third straight day.
Apple was the biggest weight on both the S&P 500 and Nasdaq 100 after reports on Monday of cuts to orders for iPhone parts. Shares declined 3.2 per cent to $485.92 and closed below $500 for the first time since February.
Retail stocks advanced after a government report showing retail sales rose more than expected in December was seen as a favourable sign for fourth-quarter growth. A separate report showed manufacturing activity in New York state contracted for the sixth month in a row in January.
“A little better-than-expected news on retail sales once again reinforces that the consumer remains alive and reasonably well,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott, which manages about $54 billion in assets.
Among retailers, American Eagle Outfitters gained 4.8 per cent to $20.58 and Gap rose 3.4 per cent to $32.46. The Morgan Stanley retail index advanced 1.5 per cent.
Express surged 23.8 per cent to $17.40 after the apparel retailer raised its fourth-quarter and full year 2012 outlook.
The Dow Jones industrial average was up 27.57 points, or 0.2 per cent, at 13,534.89. The Standard & Poor’s 500 Index was up 1.66 points, or 0.11 per cent, at 1,472.34. The Nasdaq Composite Index was down 6.72 points, or 0.22 per cent, at 3,110.78.
Apple’s stock has lost about seven per cent in the last three sessions and is down 8.7 per cent since the start of the year.
“It’s tough to discern exactly what’s putting the pressure on it. But at the end of the day, its influence, considering it’s still three and a half to four per cent of the S&P 500 index, is being felt,” Luschini said.
“I attribute (it) to just some of the bloom coming off of the rose. They haven't necessarily done anything wrong, as much as others have caught up.”
Also keeping investors on edge is the looming debt ceiling debate. On Monday, President Barack Obama rejected any negotiations with Republicans over raising the US debt ceiling. The United States could default on its debt if Congress does not increase the borrowing limit.
Resolving the debt ceiling is more a question of how than if. Investors don't expect a US default, but they are also wary of another eleventh-hour agreement like the one in August 2011.
An expected lackluster earnings season, too, kept investors from taking aggressive bets. Analyst estimates for the quarter have fallen sharply since October. S&P 500 earnings growth is now seen up just 1.8 per cent from a year ago, Thomson Reuters data showed.