Erratic session for stocks
Wall Street finished an erratic session mixed Thursday after an uneven batch of earnings reports made investors cautious about buying stocks. Disappointing economic readings added to the market’s uneasiness a day after a big rally.
The market grew jittery after the Philadelphia Federal Reserve said regional manufacturing weakened further in April. The index of manufacturing activity fell to a negative 24.9 from a negative 17.4 in March.
The survey found most manufacturing executives “cautiously optimistic” about future activity, but a report of higher unemployment claims reinforced recession worries.
Merrill Lynch reported a first-quarter loss of $1.96 billion, a write-down of $6.6 billion in assets and staff cuts totaling 4,000 jobs. But the stock gained $1.82, or 4.1% to $46.71 on remarks by Chief Executive John Thain that business conditions in April appear better.
Merrill’s report followed a larger-than-anticipated rise in IBM’s quarterly earnings, but there were also disappointing results from Nokia, the world’s biggest mobile phone company, and drug maker Pfizer.
Dan Laufenberg, chief economist for Ameriprise Financial, said the market remained cautious, though less so than in recent weeks and months.
“The market is going to go up and down. When you have nice moves like you had [Wednesday] and you hold on to most of that gain, I think that tends to be a more positive signal,” he said.
The Dow Jones industrial average was little changed, edging up 1.22 points, or 0.01%, to 12,620.49, after fluctuating throughout the session.
Broader stock indicators were mixed. The Standard & Poor’s 500 index advanced 0.85 point, or 0.1% to 1,365.56, while the Nasdaq composite index fell 8.28 points, or 0.4%, to 2,341.83.
Advancing issues narrowly outnumbered decliners on the New York Stock Exchange.
The mixed performance came a day after stocks shot higher in response to stronger-than-expected earnings from JPMorgan Chase, Coca-Cola and Intel. On Wednesday, the major indexes each rose more than 2%, with the Dow jumping more than 250 points.
The quarterly reports that investors parsed Thursday were not as auspicious. Nokia, the Helsinki, Finland, cellphone maker, said its profit rose by a weaker-than-expected 25%. It also said its global market share was down slightly. Its U.S. shares fell $4.74, or 14%, to $28.95.
Pfizer declined 70 cents, or 3.3%, to $20.40 after the company’s report that its first-quarter profit fell 18% amid competition from generics and falling sales of drugs including Lipitor, Norvasc and Zyrtec.
Harley-Davidson fell 70 cents, or 2%, to $36.09 after the motorcycle maker said that its profit declined, that it was cutting hundreds of jobs and that it would ship as many as 27,000 fewer motorcycles this year.
Alec Young, a strategist for Standard & Poor’s, said the fact that Merrill was up, along with most other major financial stocks, was a positive sign because the market appeared to have priced in the economic downturn and the expectation that first-quarter earnings aren’t going to be strong across the board.
“It just gives a feeling that overall, while the news flow isn’t that great, the market has really factored a lot of that in,” Young said. “A little bit of red is fairly normal after a day like” Wednesday.
UBS equities strategist David Bianco agreed. “Considering the nervousness out there about the economy, after a surge, not giving back a chunk of it is pretty encouraging.”
IBM was among the bright spots, boasting a higher-than-expected 26% jump in profit. IBM rose $2.61, or 2.2%, to $123.08 and was among the biggest gainers of the 30 stocks that constitute the Dow.
Government bonds fell. The 10-year Treasury note’s yield, which moves opposite its price, rose to 3.73% from 3.68% late Wednesday.
Oil prices set another record high overnight, but crude fell 7 cents from Wednesday’s close to $114.86 a barrel on the New York Mercantile Exchange, the first closing decline in a week.
Gold prices fell $5.30 an ounce to $939.80, while the dollar was little changed against the euro.
The Russell 2,000 index of smaller companies fell 5.39, or 0.8%, to 708.00.
Overseas, Japan’s Nikkei stock average rose 1.9%. Britain’s FTSE 100 closed down 1.1%, Germany’s DAX index fell 0.3%, and France’s CAC-40 rose 0.2%.
