Weak earnings reports hit stocks
on 26/10/2012 22:37:26
The Dow Jones industrial average managed a gain of 3.53 points to close at 13,107.21 after spending much of the day in the red.
The Standard & Poor's 500 index fell 1.03 points to 1,411.94 and the Nasdaq composite rose 1.83 points to 2,987.95.
Stocks rose in the morning before a mild midday sell-off, then recovered somewhat in the afternoon.
The morning gains came after the Commerce Department estimated that the US economy expanded at a 2% annual rate from July through September. That was better than the previous quarter, and better than analysts expected, but not strong enough to bring down the unemployment rate.
Even economic data that is mixed or positive will not outweigh weak earnings, said Lawrence Creatura, a portfolio manager with Federated Investors. Reports like the one today that measure gross domestic product tend to be backwards-looking, while companies are offering forecasts about the months ahead, he said.
"Company earnings trump macro data. Because investors own Apple, they don't own GDP," Mr Creatura said.
Apple fell 5.54 dollars to 604 after saying its profit will decline this holiday season.
Even with today's rise, stocks lost ground this week, inflecting a sort of death-by-a-thousand-cuts on the rally that began in September. The Dow was down 236.30 points for the week, or 1.8%. The S&P has fallen 21.25 points, or 1.5%.
Goodyear Tyre & Rubber sank 10% after a steep drop-off in sales in Europe delivered a blow to its earnings. The stock fell 1.28 to 11.02 dollars.
The advertising conglomerate Interpublic also turned in results that fell short of analysts' forecasts, and its stock fell 2.5%, or 26 cents, to 10.29.
Amazon rose 15.32, or 7%, to 238.24 dollars despite a smaller-than-expected quarterly profit and a prediction for smaller-than-expected holiday revenue.
Among other companies making big moves, cable TV provider Comcast jumped 1.20, or 3.3%, to 37.56 dollars after reporting that its income more than doubled in the latest quarter. Revenue was higher than analysts were expecting, and more customers signed up for premium services like high-definition video recorders.
Varian Medical Systems jumped 8.83, or 15%, to 66.93 dollars, the biggest increase in the S&P 500 index. The company, which sells medical imaging equipment and radiation-emitting devices for treating tumours, reported a 20% rise in income because of higher sales of devices.
On its first day of trading, dairy company WhiteWave Foods lost 25 cents to 16.75 dollars, down from its initial public offering price of 17 dollars, after rising as high as 19.17 earlier.
The yield on the 10-year Treasury note fell to 1.75% from 1.82% on yesterday.