The Joplin Globe, Joplin, MO

Business

July 23, 2013

Stocks trade flat after mixed earnings results

NEW YORK — Corporate profits news gave investors little direction Tuesday, leaving the stock market flipping between slight gains and losses in afternoon trading.  

Better earnings from big banks, health insurers and other companies have helped drive the stock market higher this month. On Tuesday, however, the encouraging and the discouraging seemed evenly matched. Wendy’s and United Technologies surged after posting stronger results than financial analysts expected. Netflix and the Altria Group, maker of Marlboro cigarettes, sank after their results came up short.

“In the absence of major economic news, the focus is on earnings this week,” said David Joy, chief market strategist at Ameriprise Financial. “And there’s nothing today to drive the market dramatically one way or another.”

The Dow Jones industrial average was up 44 points, or 0.3 percent, to 15,589 with less than an hour in the trading day.  

The Standard & Poor’s 500 index dipped one point, less than 0.1 percent, to 1,695. The Nasdaq composite fell 13 points, or 0.4 percent, to 3,587.

United Technologies led the 30 big stocks in the Dow, climbing $3.18, or 3 percent, to $105.29. The conglomerate said strong orders for its Otis elevator business in China and commercial airline parts helped lift sales and profits.

Wendy’s jumped 57 cents, or 9 percent, to $7.25. The fast-food company’s net income came in above Wall Street’s expectations. Wendy’s also announced plans to sell 425 restaurants as franchises and raised its quarterly dividend by a penny to 5 cents.  

It was a busy day for earnings, with 35 companies in the S&P 500 scheduled to turn in results. The second-quarter scorecard looks good so far. More than six out of every 10 companies have posted earnings that surpassed Wall Street’s expectations, according to S&P Capital IQ.

Analysts forecast that second-quarter earnings for companies in the S&P 500 increased 3.8 percent over the same period last year. “The bar has been set pretty low,” said Joel Huffman, senior portfolio manager at U.S. Bank Wealth Management. So, it’s hardly a surprise that many companies are able to jump over it, he said.

Sales are another story. Analysts expect revenue to shrink 0.7 percent in the second quarter. Huffman said he’s encouraged that many banks and makers of consumer-discretionary goods have reported stronger U.S. sales. “It’s an indication of the underlying growth in the U.S. economy versus other parts of the world,” he said.

Marlboro maker Altria Group said higher prices and lower expenses from a legal settlement offset a drop in cigarette sales and helped the company post an increase in profits, but the results still fell short of analysts’ expectations. Altria’s stock sank 86 cents, or 2 percent, to $36.02.

Netflix dropped $11.20, or 4 percent, to $250.74. The company said late Monday that it signed up fewer subscribers than financial analysts had projected. Big expectations have propelled Netflix’s stock up 172 percent since the start of the year, adding more pressure on the company to deliver amazing numbers.

In the market for U.S. government bonds, the rate on the 10-year Treasury note rose to 2.50 percent from 2.48 percent late Monday. Long-term interest rates have swung in a wide range since May, a result of traders speculating over when the Federal Reserve will begin pulling back on its bond-buying program.

The rate on the 10-year note, a benchmark for most loans, was trading at 1.61 percent on May 1. It reached as high as 2.75 percent by the second week of July.

 

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