Wall Street drifts after two-day climb, data supports

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were little changed on Tuesday following two days of gains on Wall Street as investors weighed the implications of strong economic data on the path of monetary policy over the next several months.

The Institute for Supply Management said its services index rose a point to 55.4 in October despite a partial government shutdown during the first half of the month. The reading came in higher than September's 54.4, handily beating expectations for a slight deceleration.

The market initially drifted to a session low after the data was released, but recouped much of that drop later.

 

Investors are scrambling to measure the impact of strong data on the Federal Reserve's decision to keep pumping $85 billion monthly into the economy in the form of bond purchases. This Fed stimulus has been instrumental in spurring a rally that has set the S&P 500 on course toward its best year in a decade.

"The economy continues to move forward, which is of course good," said Bruce Zaro "The market is looking to get its opinion of whether good news is good or bad."

The Fed has stressed that its decision to change the level of stimulus is data dependant; once the economy is strong enough, it has said it may begin to withdraw its massive bond purchases.

The Dow Jones industrial average fell 9.47 points, or 0.06 percent, to 15,629.65, the S&P 500 lost 2.44 points, or 0.14 percent, to 1,765.49 and the Nasdaq Composite added 3.085 points, or 0.08 percent, to 3,939.676.

According to Thomson Reuters data, of 404 companies in the S&P 500 that have reported results through Tuesday morning, 69.6 percent have topped Wall Street's expectations, above the long-term average of 63 percent. However, just 53.3 percent beat revenue forecasts, below the 61 percent average since 2002.

Michael Kors Holdings gained 6.4 percent to $79.55 after the luxury apparel retailer reported a better-than-expected 40 percent jump in quarterly revenue.

GT Advanced Technologies jumped 19 percent to $9.97 after it said Apple will open a manufacturing facility in Arizona in partnership with the mineral crystal specialist to make sapphire materials for Apple's electronic devices.

CVS Caremark advanced 2.6 percent to $63.28 after the drugstore operator and pharmacy benefits manager posted a higher-than-expected quarterly profit and raised its forecast for the year.

Tenet Healthcare was the worst performer on the S&P 500, down 11.8 percent to $42.55 after its third-quarter net income slid from a year earlier.

(Editing by Bernadette Baum)