(Bloomberg) -- U.S. stocks fluctuated as investors weighed growth prospects for the world's biggest economy amid rising bets on continuing policy support from the Federal Reserve.
Sliding crude prices dragged energy producers lower in early trading, while Biogen Inc. led health-care shares higher after positive trial results for a drug the company is developing with Ionis Pharmaceuticals Inc., which rallied 26 percent.
The S&P 500 Index fell 0.1 percent to 2,171 at 10:03 a.m. in New York, after its longest monthly winning streak since 2014. The Dow Jones Industrial Average declined 24.41 points, or 0.1 percent, to 18,407.83. The Nasdaq Composite Index added 0.2 percent to the highest in a year. West Texas Intermediate crude futures lost 2 percent.
“The market's in that uncertain zone as we try to see what earnings do for us,” said Bruce McCain, who helps oversee $35 billion as chief investment strategist at Key Private Bank in Cleveland. “The GDP report reminds people that things are not better yet. The question is whether or not they're willing to keep prices moving higher on the expectation that things will get better or whether they're going to insist on seeing better news as we move through this.”
A report today showed U.S. manufacturing expanded in July, though at a slower pace, indicating gradual improvement that could help the economy emerge from a weak first half of the year. The Institute for Supply Management's index cooled to 52.6 from a one-year high of 53.2 a month earlier, according to the Tempe, Arizona-based group. The median forecast in a Bloomberg survey of economists was 53.
Traders cut the chances of a rate hike in September to 20 percent from 26 percent a week earlier, and pushed back the first month with at least even odds for an increase to June 2017 from March after a report Friday showed the U.S. economy stumbled in the first six months of 2016 as companies retrenched.
Still, Dallas Fed President Robert Kaplan said a rate move higher at the next policy meeting in September is still possible. The Fed last week held borrowing costs unchanged as forecast but reiterated its intention to raise them gradually.
Investors will continue to asses the strength of the U.S. economy with reports this week offering measures on consumer spending, services industry growth, factory orders and the government's monthly payrolls report set for Friday.
Earnings also remain in focus. S&P 500 companies posting results this week include Pfizer Inc., Procter & Gamble Co., Time Warner Inc. and Priceline Group Inc. About 58 percent of index members that have reported so far beat sales projections, while 81 percent topped profit estimates. Analysts estimate profit at S&P 500 companies fell 3.2 percent in the second quarter.
“The real burden of proof now is on the economy to show some improvement in the second quarter,” David Joy, the Boston-based chief market strategist at Ameriprise Financial Inc., which oversees $776 billion, said in an interview on Bloomberg Television. “We still think we're probably going to get better than 2 percent growth in the second half and we still think maybe you get one Fed rate hike in December, but all of a sudden now with no momentum starting the quarter, those two theories have to be re-examined.”
To contact the reporters on this story: Camila Russo in Madrid at crusso15@bloomberg.net, Anna-Louise Jackson in New York at ajackson36@bloomberg.net. To contact the editors responsible for this story: Cecile Vannucci at cvannucci1@bloomberg.net, John Shipman, Alan Soughley
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