Earnings keep stocks 'stuck in a rut'

October 25, 2012: 5:55 PM ET
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NEW YORK (CNNMoney)

U.S. stocks closed with slim gains Thursday, as investors weighed better-than-expected economic data against concerns about corporate earnings.

The Dow Jones Industrial Average and Nasdaq rose 0.2%, while the S&P 500 rose about 0.3%.

Procter & Gamble (PG) was the biggest gainer on the Dow after it reported mixed quarterly results, but maintained its outlook for the full year. Rival consumer products maker Colgate (CL) said sales fell in the most recent quarter and announced a restructuring plan that includes cutting its workforce by 6% over the next four years. Shares fell almost 2%.

Unilever (UL), another consumer name, reported solid third-quarter results as growth in emerging markets offset weakness in developed economies.

ConocoPhillips (COP) said earnings fell 31% in the third quarter as oil prices sank.

Sprint (S) reported a net loss in the third quarter that widened from the same period last year.

After the close, tech giants Apple (AAPL) and Amazon (AMZN) reported results. Amazon's earnings and sales figures fell short of expectations, sending shares down more than 8% in after-hours trading. Apple shares also declined slightly after hours after the company posted weaker-than-expected fourth-quarter profits and forecast that sales next quarter would fall slightly short of analysts' expectations.

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While earnings expectations were low, the third quarter is shaping up to be a disappointment, said David Levy, a portfolio manager at Kenjol Capital Management in Austin, TX.

"Overall, earnings are the main reason the market has been stuck in a rut for the last 10 days," said Levy.

Related: 3 scariest things about this disappointing earnings season

At the same time, the market has been stymied by uncertainty ahead of the U.S. presidential election and concerns about the economic time bomb known as the fiscal cliff.

But Thursday's economic reports offered a silver lining. The government said first-time claims for unemployment benefits fell more than expected last week, to 369,000. Reports on durable goods and pending home sales in September also came in above expectations.

Investors have also been encouraged by signs of progress in Europe, where officials are expected to push ahead with plans to give Greece more time to meet its budget goals, said David Lutz, head ETF trader at Stifel Nicolaus in St. Louis.

"Some of the stress is coming off in the eurozone," said Lutz, adding that stocks are also benefiting from a rotation of money out of U.S. Treasuries.

Related: 5 hot emerging market blue chips

The UK government reported that the gross domestic product grew 1% in the third quarter, lifting that nation's economy out of recession.

European markets closed mixed. Britain's FTSE 100 ended little changed. The DAX in Germany added 0.1%, while France's CAC 40 fell 0.4%.

Late Thursday afternoon, however, Standard and Poor's downgraded three French banks including BNP Paribas (BNPQY), citing increased economic risks that leave them more exposed to a protracted recession in the eurozone.

Meanwhile, Asian markets ended mixed. The Shanghai Composite lost 0.7%, while the Hang Seng in Hong Kong gained 0.2%. The Nikkei jumped 1.1% on hopes the Bank of Japan will ease monetary policy when it meets next week.

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Companies: Zynga (ZNGA) shares surged after the social gaming firm reported sales on Wednesday that topped forecasts. Zynga also announced a partnership with bwin.party, an international gaming operator that will enable real money casino games like poker, slots and roulette in the UK.

Shares of F5 Networks (FFIV) sank after the network technology firm reported quarterly earnings Wednesday that missed expectations.

Meanwhile, online security firm Symantec (SYMC) jumped after offering strong guidance for the current quarter.

Shares of BestBuy (BBY) fell after the retailer on Wednesday warned that third-quarter sales would be weaker than expected, and announced a management shakeup.

The New York Times (NYT) company reported a surprise loss for the third-quarter as advertising revenue continued to decline. Shares fell 22%.

Shares of Angie's List (ANGI) soared after the company's earnings results topped expectations.

Shares of Pandora (P) plunged nearly 12% Thursday, following a news report that said Apple was planning to launch a rival Internet radio service next year. Citing people familiar with the situation, Bloomberg said Apple could reach a deal to launch an ad-supported Internet radio service by mid-November, with a potential launch date sometime during the first quarter of 2013.

Currencies and commodities: The dollar fell against the euro and the British pound, but gained against the Japanese yen.

Oil for December delivery rose 32 cents to settle at $86.05 a barrel.

Gold futures for December delivery rose $11.40 to settle at $1,713 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.83% from 1.78% late Wednesday.

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