NEW YORK (CNN/Money) -
A stellar quarter for IBM and a mega merger in the bank industry gave the blue chips a little lift Thursday, but disappointment about the broad tech sector's earnings and forecasts kept the rest of the stock market near unchanged.
The Dow Jones industrial average (up 15.48 to 10553.85, Charts) and the Standard & Poor's 500 (up 1.53 to 1132.05, Charts) index both gained 0.1 percent, while the Nasdaq composite (down 2.05 to 2109.08, Charts) lost 0.1 percent. The three indexes had traded on both sides of unchanged throughout the session.
"This is a classic 'right in the middle of earnings season' kind of day, where people aren't too eager to push much higher," said Art Hogan, chief market analyst at Jefferies & Co.
"But the news today has been largely positive, between the banks, IBM, the economic news, and most of the tech earnings," he added. "Intel's revenue guidance was maybe lighter than what people wanted, but still, it's been pretty good news across the board."
After the close of trade, Sun Microsystems (SUNW: down $0.10 to $5.36, Research, Estimates) reported a quarterly loss that was less than expected and narrower than a year earlier.
In addition, after the close Thursday, Juniper Networks (JNPR: up $0.24 to $22.93, Research, Estimates) said it earned 7 cents per share, 2 cents more than analysts surveyed by Reuters expected and up from a year earlier. Shares rose 7 percent after-hours.
In other after-hours news, Texas Instruments (TXN: up $1.17 to $33.65, Research, Estimates) said its chief executive is stepping down, but will remain as chairman. The company's current chief operating officer will take over as president and CEO as of May 1.
Friday morning brings earnings from General Electric (GE: unchanged at $32.00, Research, Estimates). The Dow component is forecast to have earned 45 cents, up from 31 cents a year earlier.
“It’s very hard for GE to say anything that upsets the apple cart,” added Hogan. “The company usually doesn't provide earnings surprises either way.”
Friday also brings economic reports before the bell on business inventories for November, and industrial production and capacity utilization for December. Shortly after the market open, investors will take in the usually market-moving consumer sentiment index from the University of Michigan. The preliminary reading on sentiment is forecast to have risen to 94.0 in January from 92.6 in December.
Thursday’s market
After the close Wednesday, J.P. Morgan Chase (JPM: down $0.30 to $38.92, Research, Estimates) said it has agreed to buy Bank One (ONE: up $5.20 to $50.42, Research, Estimates) in a stock deal worth around $58 billion. The combined bank will be the second biggest behind leader Citigroup (C: down $0.50 to $49.50, Research, Estimates). Bank One's stock gained 11.5 percent Thursday, while J.P. Morgan closed just below unchanged.
The news gave a boost to some other bank stocks. The financial sector’s gains, in combination with gains in IBM protected the blue chips.
IBM (IBM: up $3.71 to $94.02, Research, Estimates) reported earnings early Thursday, several days earlier than planned. Big Blue earned $1.56 per share, up from $1.34 a year earlier and above analysts' projections, thanks to the weak dollar boosting its revenue. The company also gave a bullish outlook for 2004. Its stock surged 4.1 percent and was the Dow’s one big booster.
But this didn't translate to overall tech gains, with investors taking a microscope to earnings and forecast from Intel, Yahoo! and Apple Computer -- all of which reported late Wednesday -- and finding reasons to take profits.
Intel (INTC: down $0.33 to $33.06, Research, Estimates) said quarterly revenue rose sharply from a year earlier, but results included a charge that made comparisons with the First Call estimate difficult. In addition, the company issued revenue guidance for the current quarter that some perceived as being less bullish than hoped for. After posting steeper losses in the morning, the stock closed down just one percent.
Apple Computer (AAPL: down $1.35 to $22.85, Research, Estimates) earned 16 cents per share, a penny better than expected and up from 3 cents a year earlier. The company also raised its forecast for the current quarter, saying that it expects earnings of between 8 cents and 10 cents per share, with analysts expecting 7 cents.
Yahoo! (YHOO: down $0.30 to $48.09, Research, Estimates) said it earned 11 cents per share, in line with estimates and up from 8 cents a year earlier, on revenue that topped expectations.
Despite their mostly upbeat results, shares of both Apple and Yahoo! dropped, down 5.8 percent and 0.6 percent respectively, with analysts saying that after the huge run up, the stocks may be a bit tapped out. In addition, some market watchers had been hoping for even more bullish projections than what the companies offered.
Financial stocks as a whole were among the session’s most actively-traded issues. Merrill Lynch (MER: up $1.18 to $59.59, Research, Estimates) gained 2 percent after it rang up record earnings for 2003. But Bank of America (BAC: down $0.57 to $78.68, Research, Estimates), which is about to close its merger with FleetBoston (FBF: down $0.48 to $42.60, Research, Estimates), lost 0.7 percent even after its results came in ahead of expectations. The Bank of America/Fleet combo would have created the second largest U.S. bank, were it not for the J.P. Morgan/Bank One deal.
The day's corporate news overshadowed the morning's economic reports, which showed that consumer prices edged up modestly in December, in line with estimates, showing that inflation remains mild. New jobless claims fell last week, slightly more than analysts expected. In addition, the all-important retail sales figures for December were upbeat, but analysts had expected them to be even more robust.
Market breadth was mixed. Decliners just barely edged advancers on the New York Stock Exchange, where nearly 1.69 billion shares traded. On the Nasdaq, where almost 2.21 billion shares changed hands, winners edged losers.
Treasury prices rose, with the 10-year note's yield at 3.96 percent, down from 3.99 percent late Wednesday. The dollar edged up versus the euro and the yen.
A substantial plunge in gold and other commodities, as well as gold and silver stocks added to the day’s pressure.
NYMEX light sweet crude oil futures fell $1.26 to settle at $32.53 a barrel. COMEX gold tumbled $13.30 to settle at $408.70 an ounce.
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