By Rita Nazareth
March 2 (Bloomberg) -- U.S. stocks swung between gains and losses as escalating violence in Libya triggered a rally in oil prices, tempering optimism in the economy triggered by a bigger- than-forecast increase in jobs.
MetLife Inc. dropped 4.5 percent after the largest U.S. life insurer said it will sell shares. Joy Global Inc. slumped 2.8 percent as the maker of mining equipment reported earnings that missed analyst estimates. Texas Instruments Inc. climbed 3.3 percent as JPMorgan Chase & Co. named the company a ?top pick? among semiconductor stocks and raised its recommendation on the industry. Yahoo! Inc. rose 3.8 percent on plans to sell its stake in a Japanese joint venture.
The Standard & Poor?s 500 Index rose less than 0.1 percent to 1,306.64 at 12:24 p.m. in New York and fell as much as 0.3 percent. The Dow Jones Industrial Average lost 3.14 points, or less than 0.1 percent, to 12,054.88. Crude oil for April delivery rose 2.3 percent to $101.96 a barrel following reports that Libyan fired missiles at a town square.
?We don?t know what the heck is going to happen with oil and this Mideast crisis,? said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, who helps manage $252 billion. ?The strength in the U.S. economy does not surprise me at all. However, this geopolitical thing is going to be an overhang. For the time being, if you?re going to err, err in the side of caution.?
Libya Concern
The S&P 500 posted its first drop in three days yesterday, tumbling 1.6 percent, as concern rising energy costs will hurt the economic recovery overshadowed the fastest manufacturing growth since 2004. The gauge slid 1.7 percent last week as anti- government uprisings in Libya pushed oil prices higher. Still, the S&P 500 rallied 24 percent from the end of August through yesterday as reports showed an improving economy and earnings beat analysts? estimates for the eighth straight quarter.
A private report released before exchanges opened showed that companies in the U.S. added more workers in February than forecast, indicating the labor market may be strengthening. Employment increased by 217,000 last month after a revised 189,000 gain in January, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 180,000 gain last month.
Stocks rose earlier as oil pared its advance, before crude climbed to its session high after television station France 24 said a Libyan airplane fired two missiles at a square in the town of Brega.
Stocks also turned lower as two U.S. soldiers were killed in an attack at a Frankfurt airport today.
?Terrible Event?
?We don?t know the details yet,? German Chancellor Angela Merkel told reporters in Berlin. ?We will do whatever is needed to determine what happened there,? she said. ?It?s a terrible event.?
Stock-index futures erased gains before the open of exchanges after Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank should raise the target federal funds rate to 1 percent from near zero rather than ease during the current economic recovery.
?You really need to get off of zero, in my opinion,? Hoenig said today in a speech in New York. ?I would think of moving back to 1 percent, and then I would pause. Let the market settle out? and then move to a higher rate, possibly 2 percent.
Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said the Fed may have to accommodate rising oil prices as it tackles inflationary pressures. Fed Chairman Ben S. Bernanke ?has the power to make sure that inflation stays contained,? El-Erian told Andrea Catherwood on Bloomberg Television?s ?The Pulse? program.
?Deflation Shock?
?He can only do that if he compensates for higher oil prices by lowering prices elsewhere,? El-Erian said. ?The health of the U.S. economy can?t take the deflation shock.?
MetLife fell 4.5 percent to $43.96. The largest U.S. life insurer said 146.8 million of its shares will be sold in public offerings as the firm raises funds to redeem securities given to American International Group Inc. in the purchase of a non-U.S. life insurer.
Joy Global slid 2.8 percent to $94.33. The maker of P&H and Joy mining equipment had fiscal first-quarter profit of 96 cents a share. Analysts surveyed by Bloomberg had estimated profit of $1.07 on average.
A gauge of chipmakers rallied 1.2 percent, the most of 24 industries in the S&P 500. The Philadelphia Semiconductor Index of 30 stocks climbed 1.6 percent. Xilinx Inc. and Altera Corp. rose at least 3.7 percent, leading gains in the S&P 500.
Chipmaker Upgrade
JPMorgan raised its rating on the industry to ?constructive? from ?cautious,? citing a change in its belief that an economic downturn will happen in the near future.
Texas Instruments climbed 3.3 percent to $36.14 after JPMorgan raised its recommendation for the largest analog chipmaker to ?overweight? from ?neutral.?
Yahoo gained 3.8 percent to $16.71. The Internet company is in talks to dispose of its 35 percent stake in its Japanese joint venture with Softbank Corp., according to two people briefed on the matter. The talks focus on transferring its stake in Yahoo Japan Corp. to Softbank, said the people, confirming an earlier Reuters report and asking not to be identified because the discussions are private and may not result in an agreement.
Softbank, Japan?s third-largest mobile-phone operator, said it isn?t holding discussions to buy Yahoo Japan shares. Dana Lengkeek, a spokeswoman for Sunnyvale, California-based Yahoo, declined to comment. Chizu Sasaki, a spokeswoman for Yahoo Japan, declined to comment.
The proportion of investment publications that are bullish fell to an almost four-month low of 50.6 percent between Feb. 23 and yesterday, according to New Rochelle, New York-based Investors Intelligence, which has examined forecasts in newsletters since 1963. Newsletter writers who anticipate a correction, or 10 percent decline in the market, rose to 29.9 percent, the highest since Oct. 26.
--With assistance from Nikolaj Gammeltoft in New York and Adam Haigh in London. Editor: Michael Regan
To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net
To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net
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