US stocks fall

U.S. stocks sank shallowly into the red, as investors treaded water ahead of the long-awaited outcome of the Federal Reserve meeting.

The Dow Jones Industrial Average fell 31 points to 11158 in midday trading, while the Standard & Poor’s 500-stock index slipped four points to 1189 and the Nasdaq Composite fell 13 points to 2521.

Investors were treading lightly after big Republican gains in Congress, but before the Fed announcement, due around 2:15 p.m. EDT. Investors have pushed up the stock market in recent weeks as expectations have grown that the central bank will turn to some form of quantitative easing, a massive purchase of Treasury bonds, to boost the U.S. economy.

The early gains in stocks came against a backdrop of dramatic political change, as voters Tuesday gave Republicans control of the House of Representatives and won seats in the Senate, though Democrats clung to a slim majority there. President Barack Obama is set to deliver a post-election address at 1:00 p.m. EDT.

“The election takes an unknown and makes it a known…It takes whoever is in office and makes them a more moderate president,” said Roy Williams, chief executive of Prestige Wealth Management, arguing that the election cleared away overhangs on policy as the economy improves. “I think we’ll continue to have a nice rally…Things will continue to improve. But sure, we have some potholes up ahead that we have to be concerned about.”

The Republican advance came as the economy showed tepid signs of improvement. Private-sector employment grew by 43,000 in October, topping consensus estimates of a 22,000-job gain. U.S. factory orders rose by a higher-than-expected 2.1% in September, the third consecutive month of growth for one of the economy’s key drivers. Meanwhile, a measure of nonmanufacturing activity came in at 54.3 for October, higher than September’s 53.2 reading and better than consensus expectations of 53.5.

“The numbers were generally good,” said Joe Benanti, managing director of Rosenblatt Securities, though he added that the data still suggested an economy that was “stuck in a range.”

Companies in focus include BlackRock, which tumbled 4.3% after Bank of America said it is offering at least 34.5 million shares it holds in the money manager, while fellow part-owner PNC Financial Services Group is selling up to 7.5 million shares. Bank of America may also sell another 6.3 million shares in the overallotment option. PNC gained 0.3% while Bank of America added 0.4%.

KKR fell 1.1% after third-quarter earnings dropped 61% as its private-equity portfolio appreciated less than in the year-earlier period, thus hurting its revenue.

Garmin plunged 8.4% after a 30% increase in earnings at the maker of digital navigation devices missed analysts’ expectations and came amid weaker sales and margins.

PulteGroup sunk 6.7% after the Michigan home developer’s third-quarter loss widened to nearly $1 billion dollars as the company booked $986 million in charges and orders declined, underscoring the home-building sector’s continued problems. Pulte said orders dropped 12% from a year earlier and 15% from the second quarter.

Hartford Financial Services Group jumped 9.1% after the insurer beat third-quarter earnings expectations and raised its 2010 profit estimate.

CVS Caremark gained 0.2% after the drugstore chain met earnings expectations, though it also reined in its full-year profit forecast.

MGM Resorts International surged 6.8% as the company’s third-quarter loss narrowed amid sharply lower write-downs related to its struggling Las Vegas City Center complex.

Time Warner shed 2.6% after its earnings fell 21%, as the media giant took a hit related to debt redemptions, though adjusted earnings and revenue rose. AOL, which was spun off from the media giant last year, rose 5.9% after asset sales helped the Internet company boost profits.

Aetna gained 1.4% after earnings rose 53% as investment gains and lower medical costs offset continued declines in employer-based membership. Wellpoint, however, dropped 1.6% after third-quarter profit rose 1.2% following prior-year write-downs as claims costs rose, contrasting with a trend seen in much of the health-insurance industry this year.

U.S.-traded shares of French bank Societe Generale gained 2.1% after the French lender said its third-quarter net profit doubled due to lower bad-loan provisions and growth in international retail banking.

Stocks in Europe stuck largely to the sidelines ahead of the Fed decision, with the Stoxx 600 index finishing down 0.4%. In Asia, Hong Kong’s Hang Seng index broke above 24000 to trade at its highest level since mid-2008, led by banks.

In foreign-exchange markets, the dollar edged up against other major currencies. Treasurys gained, pushing the yield on the benchmark 10-year note down to 2.541%. Oil pulled back its earlier gains to trade at around $84.38 a barrel, after official data showed falling crude-oil inventories.

Source: WSJ