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Stocks muddled as glow from Apple results fades
Source: Agencies |
April 22, 2010, Thursday
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THE stock market posted only modest gains yesterday after the glow of strong results at Apple Inc. and a few other companies faded.
The Dow Jones industrial average rose about 8 points, while broader indexes were mixed.
Technology and industrial shares drew buyers after Apple Inc. and Boeing Co. delivered results that easily beat expectations. Analysts caution that investors are starting to become accustomed to better earnings and even good news on profits might not push the market higher.
"This market is overbought and it really does need a little bit of a pullback. We're priced for perfection," said Burt White, chief investment officer for LPL Financial in Boston.
Apple's earnings blew past analysts forecasts thanks to strong sales of iPhones, sending its stock up 6 percent. Apple was the latest in a string of technology companies to report improving profits as the economy recovers. Intel Corp. and IBM Corp. also posted stronger sales and profits.
Industrial stocks rose after Boeing's first-quarter profit was stronger than expected and the aircraft maker said it plans to deliver its 787 by the end of the year. The stock rose 4 percent. United Technologies Corp.'s profit jumped and the parent of Otis elevators and Sikorsky Aircraft raised the lower end of its profit forecast.
Economic concerns eclipsed some of investors' enthusiasm over the improved earnings.
Traders grew cautious after Greece's borrowing costs jumped to record highs. Government officials in the debt-strapped country have begun discussions about the terms of a bailout plan from other eurozone countries and the International Monetary Fund. There is concerns that debt problems in Greece could spill over to other countries and jeopardize a recovery.
Investors also looked to Washington for insights into a proposed overhaul of the nation's financial regulations. There is concern among traders that the wrong mix of rule tightening could hamper profits at large financial companies. President Barack Obama plans to speak in New York City on Thursday to push for new restrictions.
The stock market has been rising for 13 months since major stock indexes hit 12-year lows. For more than two months there have been few interruptions in the advance. Many analysts say some break is needed to keep stocks from getting overheated.
The Dow rose 7.86, or 0.1 percent, to 11,124.92. The broader Standard & Poor's 500 index slipped 1.23, or 0.1 percent, to 1,205.94. The Nasdaq composite index rose 4.30, or 0.2 percent, to 2,504.61.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.2 billion shares, compared with 1.1 billion Tuesday.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.75 percent from 3.80 percent late Tuesday.
Howard Ward, chief investment officer of the GAMCO Growth Fund, said the strong reports are making it hard for investors to justify selling stocks.
Ward said earnings numbers might not be able to lift an overstretched market but that the money companies are now making again will boost the economy.
"You don't get the new jobs without the profits," Ward said. "Strong profits suggest that the employment news in the months ahead is going to be better than we've expected."
The dollar was mixed against other major currencies, while gold rose.
Apple rose US$14.63, or 6 percent, to US$259.22. The stock topped its previous record of US$251.14 set Friday.
Boeing rose US$2.75, or 3.9 percent, to US$74.16.
Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio, said most of the profit reports are so strong that stocks likely will be able to keep climbing even though he thinks the market has run too far given the fragile economy.
"We have seen tremendous earnings," he said. "Companies today really have demonstrated a will to survive and be profitable literally almost in any environment."
The Russell 2000 index of smaller companies rose 4.64, or 0.6 percent, to 726.19.
In Europe yesterday, Britain's FTSE 100 fell 1 percent, Germany's DAX index fell 0.5 percent, and France's CAC-40 dropped 1.2 percent.
The Dow Jones industrial average rose about 8 points, while broader indexes were mixed.
Technology and industrial shares drew buyers after Apple Inc. and Boeing Co. delivered results that easily beat expectations. Analysts caution that investors are starting to become accustomed to better earnings and even good news on profits might not push the market higher.
"This market is overbought and it really does need a little bit of a pullback. We're priced for perfection," said Burt White, chief investment officer for LPL Financial in Boston.
Apple's earnings blew past analysts forecasts thanks to strong sales of iPhones, sending its stock up 6 percent. Apple was the latest in a string of technology companies to report improving profits as the economy recovers. Intel Corp. and IBM Corp. also posted stronger sales and profits.
Industrial stocks rose after Boeing's first-quarter profit was stronger than expected and the aircraft maker said it plans to deliver its 787 by the end of the year. The stock rose 4 percent. United Technologies Corp.'s profit jumped and the parent of Otis elevators and Sikorsky Aircraft raised the lower end of its profit forecast.
Economic concerns eclipsed some of investors' enthusiasm over the improved earnings.
Traders grew cautious after Greece's borrowing costs jumped to record highs. Government officials in the debt-strapped country have begun discussions about the terms of a bailout plan from other eurozone countries and the International Monetary Fund. There is concerns that debt problems in Greece could spill over to other countries and jeopardize a recovery.
Investors also looked to Washington for insights into a proposed overhaul of the nation's financial regulations. There is concern among traders that the wrong mix of rule tightening could hamper profits at large financial companies. President Barack Obama plans to speak in New York City on Thursday to push for new restrictions.
The stock market has been rising for 13 months since major stock indexes hit 12-year lows. For more than two months there have been few interruptions in the advance. Many analysts say some break is needed to keep stocks from getting overheated.
The Dow rose 7.86, or 0.1 percent, to 11,124.92. The broader Standard & Poor's 500 index slipped 1.23, or 0.1 percent, to 1,205.94. The Nasdaq composite index rose 4.30, or 0.2 percent, to 2,504.61.
About three stocks rose for every two that fell on the New York Stock Exchange, where volume came to 1.2 billion shares, compared with 1.1 billion Tuesday.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.75 percent from 3.80 percent late Tuesday.
Howard Ward, chief investment officer of the GAMCO Growth Fund, said the strong reports are making it hard for investors to justify selling stocks.
Ward said earnings numbers might not be able to lift an overstretched market but that the money companies are now making again will boost the economy.
"You don't get the new jobs without the profits," Ward said. "Strong profits suggest that the employment news in the months ahead is going to be better than we've expected."
The dollar was mixed against other major currencies, while gold rose.
Apple rose US$14.63, or 6 percent, to US$259.22. The stock topped its previous record of US$251.14 set Friday.
Boeing rose US$2.75, or 3.9 percent, to US$74.16.
Mike McGervey, president of McGervey Wealth Management in North Canton, Ohio, said most of the profit reports are so strong that stocks likely will be able to keep climbing even though he thinks the market has run too far given the fragile economy.
"We have seen tremendous earnings," he said. "Companies today really have demonstrated a will to survive and be profitable literally almost in any environment."
The Russell 2000 index of smaller companies rose 4.64, or 0.6 percent, to 726.19.
In Europe yesterday, Britain's FTSE 100 fell 1 percent, Germany's DAX index fell 0.5 percent, and France's CAC-40 dropped 1.2 percent.
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