Created on Monday, 28 October 2013 Written by STEVE ROTHWELL, AP Markets Writer
NEW YORK (AP) — The Standard & Poor's 500 index held at a record high Monday as investors assessed the latest earnings from big U.S. companies.
Merck fell after the drugmaker sharply lowered its earnings forecast for the year and reported a plunge in third-quarter earnings. Roper Industries, a medical and industrial equipment maker, dropped after lowering its full-year earnings estimate.
The S&P 500 ended at a record high last week after climbing for a third straight week. Stocks have surged this year, in part because companies have been able to keep increasing their earnings even as the economy has failed to escape stall speed.
Third-quarter earnings are expected to rise by about 4.5 percent at S&P 500 companies, according to data from S&P Capital IQ. While that is the slowest rate of growth in a year, companies are still beating the estimates of Wall Street analysts. About two-thirds of the companies that have published third-quarter earnings so far have exceeded analysts' expectations.
"Earnings are beating a low bar," said Russ Koesterich, chief investment strategist at Blackrock. "You have an economy that's not producing a lot of top-line growth, but it's allowing margins to remain elevated for longer than people thought."
The S&P 500 rose one point, or 0.1 percent, to 1,761 as of 12:08 p.m. The Dow Jones industrial average edged up three points, or less than 0.1 percent, to 15,573. The Nasdaq composite was down eight points at 3,935.
Merck fell $1.19, or 2.6 percent, to $45.35 after reporting that its third-quarter profit plunged 35 percent. Roper Industries fell $5.92, or 4.4 percent, to $127.15 after the company's earnings fell short of estimates. Roper also cut its earnings forecast.
Homebuilders fell after the number of Americans who signed contracts to buy previously occupied homes fell in September to the lowest level in nine months, reflecting higher mortgage rates and home prices that have made purchases more costly.
D.R. Horton dropped 25 cents, or 1.2 percent, to $19.52. KB Home fell 30 cents, or 1.7 percent, to $17.59.
Federal Reserve policy makers meet this week, though few analysts are expecting any change in the central bank's policies. The Fed is currently buying $85 billion bonds every month to help keep down long-term interest rates and to encourage borrowing, spending and hiring.
The 16-day government shutdown that ended earlier this month likely curtailed growth in the fourth quarter. Also, many government agencies stopped publishing economic reports during the shutdown, making it harder for policy makers to get a clear picture of the economy.
The yield on the 10-year Treasury note was unchanged at 2.51 percent.
In commodities trading, the price of gold was unchanged $1,352.70 an ounce. Oil rose 69 cents, or 0.7 percent, to $98.52 a barrel.
Among other stocks making big moves, Burger King rose 88 cents, or 4.5 percent, to $20.64 after the hamburger chain said its third-quarter net income surged as it sharply reduced its expenses.