NEW YORK (CNN/Money) -
After a jittery Wednesday, stocks could be primed for gains Thursday, following a slew of solid tech results and forecasts.
New inflationary worries amid upbeat economic news and quarterly earnings kept the indexes wavering near breakeven Wednesday. The Dow Jones industrial average (down 3.33 to 10377.95, Charts) closed little changed, the Standard & Poor's 500 (down 1.27 to 1128.17, Charts) index fell 0.1 percent and the Nasdaq composite (down 5.23 to 2024.85, Charts) lost 0.2 percent. The indexes had been on both sides of unchanged throughout the session and had been down about 0.4 percent until about half an hour before the close. Market breadth was very negative.
After the close, a trio of technology issues reported strong earnings and upped their current-quarter forecasts.
Texas Instruments (TXN: down $0.30 to $28.68, Research, Estimates) reported earnings and sales that rose sharply from a year earlier, and also boosted its outlook for the second quarter because of increased demand for its chips used in mobile phones and other electronic devices. Shares gained 2 percent in after-hours trade.
Chipmaker Advanced Micro Devices (AMD: down $0.04 to $17.12, Research, Estimates) reported earnings of 12 cents a share, reversing a year-earlier loss, and soundly topping expectations. The company also issued an improved forecast for the second quarter.
Apple Computer (AAPL: down $0.29 to $26.64, Research, Estimates) also said improved demand for its products resulted in solid results that grew from a year earlier. The company also said second-quarter results would beat expectations. Shares advanced in after-hours trade.
Thursday brings one of the week's most-anticipated reports, from IBM (IBM: up $0.66 to $93.70, Research, Estimates), due after the close. (For a detailed IBM earnings preview, click here.) Ahead of that, earnings are due from Citigroup (C: down $0.25 to $50.95, Research, Estimates), EMC (EMC: unchanged at $13.20, Research, Estimates), Tribune (TRB: up $0.45 to $51.60, Research, Estimates) and others. (For a look at the week's biggest earnings, click here.)
Wednesday's market
U.S. stock markets tumbled sharply Tuesday, as investors digested the session's strong earnings and surprise rise in retail sales and determined that interest rates could rise as soon as this summer or early fall, instead of later, as had previously been expected.
Those concerns were revived Wednesday following the release of the CPI, a broad measure of consumer prices, although the market managed to recover most of the session's losses by the close. Consumer prices rose 0.5 percent in March, when economists were expecting a rise of 0.3 percent, in line with February. Prices, excluding volatile food and energy prices, rose 0.4 percent in March, versus expectations for a gain of 0.2 percent, the same rise clocked in February.
A number of interest rate-sensitive sectors were under pressure again, including real estate investment trusts (REITs), homebuilders, financials and commodity-related issues.
"There's been this dramatic rise in interest rates recently, and it's sent a shiver through the market," said Timothy Ghriskey, chief investment officer at Solaris Asset Management.
"The earnings that have been released so far have been pretty positive, but the market doesn't seem to be reacting to that because it is preoccupied with rate hikes and Iraq," he added.
The focus on interest rates somewhat distracted investors from the earnings, although Intel's weaker-than-expected report and forecast drew some attention, as did McDonald's lower March same-store sales.
What moved?
McDonald's (MCD: down $1.27 to $27.00, Research, Estimates) lost nearly 5 percent and was the Dow's biggest decliner following news issued late Tuesday. The company reported March sales at stores open a year or more in the U.S. that rose from a year earlier, but missed estimates. The company also said same-store sales in Europe fell in March when analysts were expecting a rise. On a positive note, the company said it expects earnings of 40 cents per share, up from 29 cents a year earlier and 3 cents more than what analysts currently expect.
However, investors and analysts focused on the same-store sales numbers, sending the stock lower. CIBC World Markets downgraded the fast-food behemoth to "sector performer" from "sector outperformer" early Wednesday.
Technology leader Intel (INTC: down $0.30 to $27.37, Research, Estimates) reported earnings late Tuesday of 26 cents per share, up from 14 cents a year earlier and a penny less than what analysts surveyed by First Call were expecting. Revenue also rose from the year earlier but missed expectations.
The company's chief financial officer also said that technology spending is picking up, a major positive for the technology sector. However, the company also said that revenue in the current quarter could miss estimates and that its profit margins would be negatively impacted by lower revenue and increased spending on new technology.
Shares fell 1 percent and topped the Nasdaq's most-actives list.
Security stocks also tumbled in active Nasdaq trade, succumbing to profit-taking after amassing huge gains in the last few weeks in response to heightened geopolitical worries. Among the movers, Mace Security International (MACE: down $3.13 to $7.02, Research, Estimates) lost nearly 31 percent and IPIX (IPIX: down $6.24 to $15.18, Research, Estimates) lost 29 percent.
On a positive note, chemical maker and fellow Dow component DuPont (DD: up $1.31 to $45.00, Research, Estimates) said quarterly earnings would top estimates thanks to solid performance in its agriculture and nutrition segment. Forest products maker Georgia-Pacific (GP: up $0.13 to $34.25, Research, Estimates) also said its results would top expectations because of strength in its building products businesses.
However, expectations for strong results remain and that may be providing some support for the market, analysts say. First-quarter earnings are expected to rise 21 percent in the first quarter versus the same period a year earlier, according to a consensus of analysts surveyed by tracking firm First Call.
Market breadth remained negative but was improved from the early going. On the New York Stock Exchange, decliners topped advancers by thirteen to four as 1.53 billion shares changed hands. On the Nasdaq, losers beat gainers by more than three to two as 1.80 billion shares traded.
Treasury prices edged lower, pushing the 10-year note yield up to 4.36 percent from 4.35 percent late Tuesday. The dollar rose versus the yen and euro.
Among commodities markets, NYMEX crude oil futures fell 26 cents to settle at $36.42 a barrel. COMEX gold fell $7.20 to settle at $400.50 an ounce.
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