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US: Wall Street flat; fear barometer falls to 1993 low
[SAN FRANCISCO] The S&P 500 ended flat on Monday after briefly touching a record high, while Wall Street's "fear gauge" dropped to its lowest in over two decades following centrist Emmanuel Macron's victory in the French presidential election.
The CBOE Volatility index dropped 0.8 point to close at 9.77, its lowest since 1993 as investors took comfort from Mr Macron's victory, as well as from strong quarterly reports in recent weeks.
A declining VIX typically indicates a bullish outlook for stocks, but the extreme lows the index has touched are sounding caution for some stock investors.
"It's been here before, but not much lower than this," said Donald Selkin, chief market strategist at Newbridge Securities in New York.
"It's signalling that something negative is in the works."
Seven of the 11 major S&P sectors dipped, with the materials index down 0.91 per cent and energy rising 0.7 per cent on the back of higher oil prices.
The euro hit a six-month high against the US dollar after Mr Macron comfortably defeated far-right nationalist Marine Le Pen, who had threatened to take France out of the European Union.
"We remain largely constructive of the equity market and view that the path of least resistance is higher," said Bill Northey, chief investment officer at Private Client Group of US Bank.
The Dow Jones Industrial Average edged up 0.03 per cent to end at 21,012.28 points and the S&P 500 gained 0.08 points, less than a hundredth of a per cent, to end at 2,399.37. It briefly touched a record high of 2,399.94.
The Nasdaq Composite added 0.03 per cent to 6,102.66.
With March-quarter reporting season nearly complete, S&P 500 earnings on average have grown 14.4 per cent, and earnings for the June quarter are expected on average to increase 8.6 per cent, according to Thomson Reuters I/B/E/S.
Suggesting US stocks remain expensive, the S&P 500 is trading at 17.8 times expected earnings, compared with its 10-year average of 14.2, according to Thomson Reuters Datastream.
After the bell, car rental company Hertz Global Holdings reported a deeper-than-expected quarterly loss and its stock slumped 15 per cent.
Kate Spade jumped 8.31 per cent during Monday's session after bigger rival Coach Inc said it would buy the handbag maker for US$2.4 billion to increase its exposure to millennial shoppers. Coach shares rose 4.8 per cent.
Straight Path surged nearly 33 per cent after an unidentified telecommunications company raised its offer to buy the wireless spectrum holder for about US$3.1 billion, trumping a bid by AT&T. Sources told Reuters that the bidder was Verizon.
Tyson Foods was the biggest S&P loser, down 6.08 per cent after the meat processor reported a slump in quarterly profit.
Declining issues outnumbered advancing ones on the NYSE by a 1.23-to-1 ratio; on Nasdaq, a 1.22-to-1 ratio favoured decliners.
The S&P 500 posted 44 new 52-week highs and four new lows; the Nasdaq Composite recorded 116 new highs and 58 new lows.
About 6.3 billion shares changed hands on US exchanges, below the 6.6 billion daily average over the last 20 sessions.