Stocks Flat on Earnings Reports
Wall Street ended mixed Thursday as investors sorted through the latest batch of corporate earnings reports.
In other trading, long-term bond yields continued to slide after the government provided more evidence that inflation is subdued.
Gold suffered its biggest decline in more than three months as the dollar strengthened.
Fourth-quarter earnings reports continue to be the market’s primary focus, analysts said. IBM’s strong report, and its upbeat forecast for 2004, were well-received, driving the computer giant’s shares up $3.71 to $94.02 and helping to lift the Dow Jones industrial average 15.48 points, or 0.2%, to 10,553.85.
The broader Standard & Poor’s 500 index edged up 1.53 points, or 0.1%, to 1,132.05, its highest since April 2002.
But the technology-dominated Nasdaq composite eased 2.05 points, or 0.1%, to 2,109.08, as some other major tech names pulled back after their earnings news.
Winners and losers were about even on the New York Stock Exchange and on Nasdaq. Trading remained heavy.
Many investors are looking to profit reports to justify stocks’ sharp gains over the last year.
In reports issued after regular stock trading ended Wednesday, Intel, Apple Computer and Yahoo showed strength in fourth-quarter results, but some investors wanted to see more optimism from the companies about 2004 earnings, analysts said.
On Thursday, Intel lost 33 cents to $33.06, Apple dropped $1.35 to $22.85 and Yahoo was off 30 cents to $48.09.
Still, all three stocks ended above their lows for the day of $32.67, $22.50 and $45.86, respectively.
The Nasdaq index was down as much as 23 points before rebounding in the afternoon.
After sliding early in the day, many tech stocks gained as “long-term investors looked and said, ‘Hey, this isn’t bad,’ ” said Al Kugel, senior investment strategist at Stein Roe Investment Counsel in Chicago, referring to firms’ earnings reports.
Besides IBM, other stocks gaining on quarterly earnings news included semiconductor equipment maker Teradyne, up $3.38 to $30, and electronics retailer RadioShack, up $2.14 to $32.49.
Many financial stocks rose in the wake of J.P. Morgan Chase’s takeover deal for Bank One. Bank One soared $5.20 to $50.42. J.P. Morgan dipped 30 cents to $38.92.
The day’s economic news mostly supported stocks. Federal Reserve reports on manufacturing activity in the New York and mid-Atlantic regions showed continued strength.
Also, the government said the “core” consumer inflation rate was up a minuscule 0.1% in December.
The tame inflation news encouraged more investors to lock in yields on long-term bonds, on the expectation that the Fed won’t be tightening credit soon.
The yield on the 10-year Treasury note, a benchmark for mortgages, slipped to 3.97% from 4% on Wednesday, and now is the lowest since Oct. 1.
On Wall Street, some analysts say the outlook still is strongly bullish for stocks. With corporate fundamentals improving, the day-by-day earnings reports and economic data will create short-term uncertainly but little long-term damage, said Doug Sandler, equity strategist for Wachovia Securities.
“There’s a lot of hope pinned on earnings, but that’s a very short-term view,” Sandler said. “I’m comfortable with closing my eyes and getting through earnings season. You know the recovery’s coming.”
In commodities trading, near-term gold futures dropped $13.30, or 3.2%, to $408.40 an ounce in New York, the biggest one-day drop since Oct. 3.
Analysts said the dollar’s rebound against the euro this week is weighing on gold. The falling dollar had been making gold cheaper for foreign investors.
Gold also may have been hurt by a pullback in crude oil prices. Near-term futures in New York dipped $1.06 to $33.44 a barrel after a sharp run-up in recent weeks on supply concerns.
