U.S. Stocks Erase Losses as Ukraine Conflict Spurs Energy Rally

Aug 15, 2014 5:03 pm ET

Aug. 15 (Bloomberg) -- U.S. stocks erased losses as increasing violence in Ukraine sent oil prices to the biggest increase in a month and spurred a rally in energy producers.

Anadarko Petroleum Corp., Cimarex Energy Co. and Kinder Morgan Inc. led a measure of oil and natural gas producers in the Standard & Poor’s 500 Index to a 0.5 percent advance, the most among 10 main industries. Nordstrom Inc. sank 5.2 percent after reporting sales that missed analysts’ estimates. Monster Beverage Corp. soared 30 percent after Coca-Cola Co. agreed to buy a stake in the company.

The S&P 500 pared declines in the late afternoon, ending the day little changed at 1,955.06 as 4 p.m. in New York. It earlier fell as much as 0.7 percent. The Dow Jones Industrial Average slid 50.67 points, or 0.3 percent, to 16,662.91. About 6 billion shares changed hands on U.S. exchanges today, 5.7 percent above the three-month average.

“Investors are trying to weed through what exactly is going on in Ukraine, and the market is drifting back,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group LP, said in a phone interview. “We have a geopolitical situation that needs to be addressed, and that’s overshadowing everything else in the market.”

Ukrainian government troops attacked an armed convoy that had crossed the border from Russian territory, Andriy Lysenko, a spokesman for the country’s military, told reporters in Kiev. Ukrainian soldiers continue to come under shelling, including rounds fired from Russia, he said.

Aid Convoy

The Russian Foreign Ministry said in a statement that Ukraine is attempting to disrupt an aid convoy, and called for a cease-fire to allow delivery of supplies. The government in Kiev has for months said that separatist rebels in its easternmost regions are receiving support from Russia, which backs them with artillery fire. Russia has repeatedly denied any involvement in the Ukrainian unrest.

The turmoil pushed energy prices higher, with West Texas Intermediate crude rising 1.9 percent to $97.35 a barrel. Kinder Morgan Inc. rallied 3.9 percent, bringing gains for the week to 15 percent after Houston billionaire Richard Kinder made a move to consolidate his pipeline empire. Cimarex and Anadarko climbed more than 2 percent.

The Chicago Board Options Exchange Volatility Index, which usually moves in the opposite direction to the S&P 500, jumped 5.9 percent to 13.15, halting five days of declines. The gauge lost 17 percent for the week.

Weekly Move

The S&P 500 rose 1.2 percent this week as signs of a slowing economy stoked bets central banks will leave interest rates near record lows for longer, overshadowing escalating tensions in Ukraine.

Economic data today showed industrial production advanced 0.4 percent in July, while the New York Fed Empire Manufacturing gauge fell more than estimated and consumer confidence unexpectedly declined to its lowest level of the year.

Nineteen S&P 500 companies, including Home Depot Inc. and Hewlett Packard Co., are scheduled to release earnings next week. About 76 percent of those that have reported so far this season have beaten analyst estimates for earnings, while 65 percent have exceeded sales projections, data compiled by Bloomberg show.

Nordstrom slid 5.2 percent to $65.11, the lowest since May. The largest U.S. luxury department-store chain reported same- store sales that missed estimates in the most recent quarter.

Monster Beverage

Monster Beverage soared 30 percent to a record $93.49. Coca-Cola agreed to swap some brands and buy a 17 percent stake in the company for about $2.15 billion, increasing its exposure to the growing energy-drink market. Coca-Cola added 1.7 percent to $40.88 for the biggest gain in the Dow.

Applied Materials Inc. jumped 6.3 percent to $22.48 after forecasting sales that may top analysts’ estimates. The largest maker of semiconductor-manufacturing equipment forecast fiscal fourth-quarter sales that may top estimates as it steals orders from rivals demand rises for machines that make displays.

Vringo Inc. plummeted 72 percent to 88 cents. The patent licensing firm, which reported $1.1 million in revenue last year, fell after Google Inc. won its bid to overturn a $30.5 million patent-infringement verdict. The U.S. Court of Appeals for the Federal Circuit in Washington determined that the Vringo patents in the case were invalid, according to an opinion on the court’s website.

--With assistance from Elena Popina and Oliver Renick in New York and Jonathan Morgan in Frankfurt.