Wall Street retreats from session highs, HP weighs
Wall Street edged up on Wednesday on stronger-than-expected U.S. labor and service-sector data, but the Dow industrials were hobbled by a slide in Hewlett-Packard.
Shares of Hewlett-Packard dropped sharply after the company warned on Wednesday of a darker outlook for 2013 earnings, reflecting slow progress on CEO Meg Whitman's turnaround plan while technology spending sputters and driving its stock down to a nine-year low.
The three major U.S. stock indexes, which initially got a modest lift from the positive data, came off their highs by late afternoon trade on lingering concerns about the global economy. A gloomier outlook in China and Europe weighed on commodity prices and hit energy and materials shares.
"The ADP numbers were good and the services index was good, but we are missing the big catalyst to keep the market up," said Jack De Gan, principal and senior advisor at Harbor Advisory in Portsmouth, New Hampshire.
"The next big catalyst will be Friday's employment numbers if we don't get any news out of Europe on the progress of Spain's bailout before that."
Data showed growth in the U.S. services sector picked up in September, defying economists' expectations for a slight decrease, while last month, the private sector added more jobs than forecast. The data comes ahead of the closely watched monthly U.S. non-farm payrolls report on Friday.
The S&P's consumer discretionary sector index rose 0.7 percent. It was the best-performing S&P 500 sector, helped by stocks like Amazon , up 1.8 percent at $255.04, and homebuilders like PulteGroup , up 5.8 percent at $16.46.
But prices of crude and metals tumbled, pressuring stocks in the energy and basic materials sectors after the euro zone looked unable to dodge a recession based on a reading of purchasing managers indexes last month, and China's slowdown looked likely to extend to a seventh quarter.
The S&P energy index fell 1.4 percent. Chevron Corp also slipped 1.4 percent, falling to $116.36, and dragging on the Dow.
The Dow Jones industrial average was up 15.96 points, or 0.12 percent, at 13,498.32. The Standard & Poor's 500 Index was up 3.15 points, or 0.22 percent, at 1,448.90. The Nasdaq Composite Index was up 10.29 points, or 0.33 percent, at 3,130.33.
Earlier in the session, the Dow climbed as high as 13,536.27, while the S&P 500 hit an intraday high at 1,454.30. The Nasdaq rose to an intraday high at 3,142.36.
HP, the largest U.S. technology company by revenue, forecast that its earnings will slide sharply next year, compared with Wall Street's expectations for flat profits. HP shares fell 12.9 percent to $14.91.
In contrast, Best Buy shares gained 4.8 percent to $17.79 as founder Richard Schulze and at least four private-equity firms started examining its books, in early steps toward what could become an $11 billion buyout.
The S&P 500 ended September with its fourth-straight month of gains, adding roughly 11 percent since the end of May.
"The market has lifted meaningfully since June 1st, and it has taken the last couple of weeks to consolidate those gains," said Jim Russell, chief equity strategist at U.S. Bank Wealth Management in Cincinnati.
The proportion of bullish U.S. investment advisors fell below 50 percent for the first time in five weeks, hitting 46.8 percent in the latest week versus 51 percent the previous week, according to a survey by Investors Intelligence on Wednesday.
Investors often see bullishness as a contrarian indicator, meaning that when bullishness is running high, the market may be due for a pullback. Investors Intelligence said a reading of 55 can often signal a market top.
Shares of Family Dollar Stores rose 3.6 percent to $68.37 after the discount chain posted a higher quarterly profit.
Not all was rosy, though, on the earnings front. Monsanto shares fell 2.3 percent to $88.49 after the agribusiness group posted a fourth-quarter loss during a seasonally sluggish sales period.
(Editing by Jan Paschal)