US STOCKS-Wall St flat; retailers gain for a second day

Wed Feb 26, 2014 2:52pm EST

* S&P 500 has been unable to reach record level

* Target and Lowe's rally after results

* January new home sales surge past forecasts

* Indexes down: Dow 0.1 pct, S&P 0.1 pct, Nasdaq 0.1 pct

By Caroline Valetkevitch

NEW YORK, Feb 26 (Reuters) - U.S. stocks were nearly flat on Wednesday, with the S&P 500 holding below resistance levels even as retailers gained for a second day.

Shares of retailers Target Corp and Lowe's Cos Inc rose, giving the S&P 500 its biggest boosts.

The S&P 500 hit a record intraday high of 1,858.71 on Monday but has been unable to break above it since then.

"We are just biding time to see which way this market is going to go, if it's going to break through or if we are going to have a pullback here," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

In another positive sign, new home sales surged to a 5-1/2-year high in January, far outpacing expectations. While much recent data have been below forecasts, analysts have attributed that to bad weather rather than worsening fundamentals. The housing data could support that interpretation.

But investors also were watching for changes in Ukraine after Russian President Vladimir Putin put 150,000 combat troops on high alert for war games near Ukraine.

"It's bigger automatically because Russia is involved," Mendelsohn said.

The Dow Jones industrial average fell 10.77 points or 0.07 percent, to 16,168.89, the S&P 500 lost 2.5 points or 0.14 percent, to 1,842.62 and the Nasdaq Composite dropped 3.649 points or 0.09 percent, to 4,283.938.

Target jumped 7.1 percent to $60.35 after reporting its results, even as the retailer said the sales and earnings had been impacted by a massive data breach and that costs relating to the event could hurt future profits.

Lowe's stock rose 4.9 percent to $50.48 after the home improvement retailer reported earnings and sales growth and an additional stock buyback program of $5 billion. The results came a day after peer Home Depot also posted strong earnings.

Market moves may be slight until Thursday, when Federal Reserve Chair Janet Yellen addresses the Senate Banking Committee in semi-annual testimony about monetary policy. Her comments will be scoured for insight into how much an unexpectedly cold winter has affected economic activity, and for confirmation the Fed will maintain its stimulus-trimming schedule.

On the downside, both Chesapeake Energy Corp and First Solar Inc fell after posting declines in earnings. First Solar shares dropped 9.8 percent to $52.30 a day after the solar panel maker reported that its fourth-quarter net income fell 58 percent. Chesapeake fell 5.2 percent to $25.54 after it swung to a net loss on charges related to employee termination costs.

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