US Stock Pare Gains, Stay Above 50-day Average

Michael Matthews, Benzinga Staff Writer

July 12, 2012 2:21 PM

Tickers: JPM, PG

U.S. stocks fell for a sixth day but pared losses in afternoon trading on Thursday amid reports that activist shareholder Bill Ackman was building a stake in consumer products company Procter & Gamble (NYSE: PG).

The Dow Jones Industials slipped back into negative territory after briefly posting a gain in afternoon trading.

The string of consecutive declines has yet to result in oversold conditions, however; the NYSE McClellan Oscillator, closely watched by technical analysts, remains in slightly overbought territory, with a latest reading of 7.

Market breadth was weak, as was volume. Decliners outpaced advancers by a 60% to 30% ratio, with about 10% of shares unchanged.

With an hour left to trade, the S&P stood at 1337, rallying back above its 50-day moving average and above trendline support near 1335.

The U.S. dollar index made fresh year highs with the euro reaching new two-year lows intraday, possibly putting additional pressure on U.S. multinationals during earnings season.

The rising dollar also reflected the markets read on Wednesday's FOMC minutes: additional quantitative easing does not appear imminent.

Some market participants have been looking for additional government intervention as a potential catalyst for riskier currencies, as well as stocks.

Earlier on CNBC, billionaire investor Warren Buffett said there are now more headwinds facing the U.S. economy than there were a year earlier, and that he remains in a holding pattern on where things are headed.

“Europe is really, it's headed downward in the last … six weeks or so,” Buffett said. “It wasn't going that way before. It wasn't doing that well, but it hadn't really hit the skids.”

P&G shares were among the strongest S&P 500 gainers, up 4% in afternoon trade, pacing slight gains for the SPDR Consumer Staples ETF (NYSE: XLP). The FTC granted two entities of Ackman's Pershing Square Capital antitrust approval for two transactions related to P&G; details were not disclosed.

Pershing has built positions in other public companies in the past using derivatives that convert to common stock.

First-time unemployment claims were at their lowest levels since March 2008, based on data released Thursday morning; it did not ignite much optimism, although the data did not ignite an intraday rally. Lower claims were explained away partially on fewer auto sector layoffs than normal and other one-time events.

Stocks on the move included Supervalu (NYSE: SVU), which fell more than 40% in afternoon trading after it reported earnings that fell below expectations. It also suspended its dividend and said it was reviewing strategic options.

Marriott International (NYSE: MAR) fell after it cut its growth outlook outside North America.

JP Morgan (NYSE: JPM) shares fell about 1%, ahead of earnings expected Friday morning.

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