NEW YORK (CNN/Money) -
Stocks closed mixed Tuesday, with technology shares the weakest, as investors took in the morning's mixed corporate news ahead of Intel's earnings report and forecast, released after the bell.
The Dow Jones industrial average (up 9.37 to 10,247.59, Charts) and the Standard & Poor's 500 (up 0.79 to 1,115.14, Charts) index closed a few points higher and the Nasdaq composite (down 5.26 to 1,931.66, Charts) closed a few points lower. All three indexes had been flat to barely higher throughout the session.
Shortly after the close, chip leader and Dow component Intel (INTC: down $0.10 to $26.14, Research, Estimates) reported earnings of 27 cents per share, in line with estimates and up from 14 cents a year earlier. However, the company’s quarterly revenue and gross margins missed expectations.
Looking forward, the company forecast revenue growth of between $8.6 billion and $9.2 billion, with the midpoint of $8.9 billion surpassing the average estimate of analysts surveyed by First Call. However, countering that, the company lowered its 2004 gross margin target. (For more details on Intel’s report and guidance, click here.)
Shares dipped close to 5 percent in after-hours trade.
But helping select names in tech was Juniper Networks (JNPR: Research, Estimates), which rallied 12 percent after the close. The smaller Cisco Systems (CSCO: Research, Estimates) rival reported second-quarter earnings of 8 cents per share, up from a year earlier and beyond what analysts were expecting on revenue that also rose from a year ago and surpassed estimates. The company also increased its earnings and revenue estimates for the third quarter.
During the session, investors focused on the mixed signs in the morning's corporate news.
An upgrade of IBM, strong earnings from Johnson & Johnson and bullish news from Qualcomm provided some support. But negative news in the software sector and a weaker-than-expected earnings report from Merrill Lynch countered any advance.
“We went into the second-quarter earnings period with the expectations that the earnings will be very good, so I think you're going to see people responding more to the negative surprises than the positives,” said John Hughes, a market analyst at Shields & Co.
Before the start of trading Wednesday, earnings reports are due from Banc of America (BAC: Research, Estimates) and the New York Times (NYT: Research, Estimates). After the close, earnings are due from Advanced Micro Devices (AMD: Research, Estimates) and Apple Computer (AAPL: Research, Estimates).
Wednesday brings influential economic news in the way of June retail sales and sales excluding autos, both expected to show a decline from May’s levels, according to Wall Street economists.
“In the last few weeks, we've seen a lot of selling come in, even though the indexes haven't moved much,” said Brian Bensch, investment manager at Melhado, Flynn & Associates. "And the internal indicators I look at suggest the market is trending bullish in the very short term.
“But the pall that’s been hanging over the market is still there,” he added. “I think we're going to stay in this broad range through the elections unless we get a very good piece of news before then.”
IBM and other movers
Countering the slew of recent downgrades and earnings warnings in the technology sector, IBM (IBM: up $0.30 to $85.25, Research, Estimates) gained Tuesday after Morgan Stanley upgraded the stock to "overweight" from "equal weight," saying the recent weakness in the stock was a buying opportunity and that IBM will do well regardless of how the tech environment shapes up in the future.
Qualcomm (QCOM: up $0.82 to $70.27, Research, Estimates) edged higher after announcing a 2-for-1 stock split and raising its quarterly dividend by 40 percent.
Nortel Networks (NT: up $0.53 to $4.76, Research, Estimates) rallied after saying that it expects 2004 revenue to grow faster than the market. The telecom gear maker also implied that it will be making further cost cuts.
Dow component Johnson & Johnson (JNJ: up $0.49 to $55.38, Research, Estimates) gained after reporting earnings of 82 cents per share, more than double what it earned a year ago and 3 cents more than expected.
On the downside, Merrill Lynch (MER: down $1.67 to $49.80, Research, Estimates), the financial services firm, reported earnings of $1.06 per share, up from $1 a year earlier, but 3 cents short of estimates. The company also said it would buy back another $2 million worth of its stock as part of its ongoing stock buyback program. Shares lost nearly 3 percent.
Linux provider Red Hat (RHAT: down $4.62 to $15.73, Research, Estimates) tumbled close to 23 percent and was the Nasdaq's second most-actively traded issue. The company said that it will restate the last three fiscal years and the recently-reported quarter to reflect changes in the way it accounts for software subscription revenue, at the behest of its new accountants.
Software firm Fair Isaac (FIC: down $7.36 to $24.00, Research, Estimates) tumbled more than 23 percent after warning late Monday that third and fourth quarter earnings would miss estimates due to lower one-time software license fees.
Market breadth was mixed and volume was light. On the New York Stock Exchange, where 1.19 billion shares changed hands, advancers barely edged decliners. On the Nasdaq, losers just topped winners as 1.48 billion shares changed hands.
Treasury prices fell, pushing the 10-year note's yield up to 4.47 percent from 4.44 percent late Monday. Bond prices and yields move in opposite directions. The dollar gained versus the yen and euro.
Among commodities markets, NYMEX light sweet crude oil futures fell 10 cents to $39.54 a barrel. COMEX gold fell $6.10 to settle at $402.30 an ounce, tumbling along with other dollar-traded commodities.
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