NEW YORK (CNN/Money) -
U.S. stocks closed mixed Tuesday, with blue chips a touch higher and techs a touch lower as renewed geopolitical worries and some technical factors diluted optimism about earnings and the economic recovery.
The Dow Jones industrial average (up 33.40 to 10478.16, Charts) gained 0.3 percent, the Standard & Poor's 500 (up 2.50 to 1138.11, Charts) index added 0.2 percent, both having traded as much as 0.8 percent higher through the early afternoon. The Nasdaq composite (down 4.20 to 2032.53, Charts) fell 0.2 percent, having earlier posted gains of 0.5 percent.
A blue-chip led rally had propelled U.S. stock markets through the mid-afternoon. But the major indexes faltered near the close, losing momentum, in response to some technical factors, some profit taking after the morning rally, and a revival of geopolitical concerns. Among them: reports of a series of explosions in the Syrian capital of Damascus and continued fighting in Iraq.
Despite the lackluster end to the session, traders said the market showed some positive signs, due to the fact that stocks did manage to rally through most of the session, in response to strong earnings and economic news.
"The larger trend remains to the upside, but its hard to say whether we'll see gains in the short-term," said Art Hogan, chief market analyst at Jefferies & Co.
This marked a change from the past few weeks, in which investors have shrugged off the mostly bullish earnings, as a debate between optimism about a recovery and worries about interest rates raged on. That debate seems to have been set aside for now, analysts say, with investors seeming to have accepted that rates are bound to rise soon, but the rise won't be a substantial one.
"The market's noting that earnings are good, the economy is doing well, and yes, interest rates will rise, but not dramatically," said Brian Bensch, an investment manager at Melhado, Flynn & Associates. "Interest rate sensitive stocks are starting to come back after falling in the last few weeks."
Instead of selling sharply on the morning's strong economic news, investors seemed to take it as a positive, as well.
While the market could potentially retest recent highs, there isn't a sense that it could break through, as the momentum is not there, Bensch added. Other technical indicators also imply a pullback may be on the way.
After the close, McDonald's (MCD: down $0.12 to $27.20, Research, Estimates) reported earnings of 40 cents per share, in line with estimates and up from 29 cents a year earlier.
Flextronics (FLEX: unchanged at $18.46, Research, Estimates) reported a fiscal fourth-quarter profit after the bell of 13 cents per share, up from 5 cents a year earlier and two cents more than what analysts were expecting.
Also after the close, Monster Worldwide (MNST: down $0.60 to $28.21, Research, Estimates) reported earnings of 11 cents a share, a penny more than expected and two cents more than a year earlier. The company also issued a second-quarter forecast that was in line with current expectations. The forecast may have disappointed some investors hoping for a more bullish outlook and the stock tumbled in extended-hours trading.
Earnings are due before the start of trading Wednesday from Comcast (CMCSA: Research, Estimates), Halliburton (HAL: Research, Estimates) and Phelps Dodge (PD: Research, Estimates).
Tuesday's movers
A number of blue chips managed to gain on the session, including Dow components Honeywell (HON: up $0.68 to $35.44, Research, Estimates) and Merck (MRK: up $0.61 to $47.25, Research, Estimates).
Dow component Exxon Mobil jumped 1.7 percent, as crude prices rose on OPEC news, and in response to upbeat earnings from oil services stocks including Baker Hughes (BHI: up $1.72 to $38.27, Research, Estimates) and Transocean (RIG: up $1.61 to $29.12, Research, Estimates).
Defense contractor Lockheed Martin (LMT: up $0.38 to $46.88, Research, Estimates) reported earnings that rose from a year earlier and topped expectations and also raised its 2004 outlook. The stock gained 0.8 percent.
However, not all companies that reported strong earnings saw their stocks rewarded.
Dow component DuPont (DD: down $0.47 to $44.52, Research, Estimates) posted earnings of 96 cents per share, up substantially from a year earlier and a penny more than what analysts were expecting. New Dow component Verizon Communications (VZ: down $0.24 to $37.50, Research, Estimates) said it earned 58 cents per share in the last quarter, down from a year earlier, but a penny higher than what analysts were expecting. Shares of both firms edged lower.
In addition, chipmaker Conexant Systems (CNXT: down $0.80 to $4.96, Research, Estimates) tumbled after the company reported a higher-than-expected profit late Monday, but issued a second-quarter forecast that was weaker than expected.
But overall, Tuesday's earnings seemed to confirm what market participants already knew -- that earnings in the first quarter were stellar. (For a look at this week's key earnings reports, click here.)
Market breadth was mixed. On the New York Stock Exchange, some 1.55 billion shares changed hands with advancers soundly beating decliners. On the Nasdaq 1.90 billion shares traded and decliners edged advancers.
Existing home sales for March blew past economists' expectations and the consumer confidence index for March surged well above predictions. Previously, such strong numbers might have sparked interest rate hike fears, Bensch said, but investors have accepted that rates are going to rise fairly soon, but won't rise substantially.
Among commodities markets, NYMEX light sweet crude oil prices rose 56 cents to settle at $37.53 a barrel after the president of OPEC and others discussed raising the target price of crude oil. COMEX gold added $2.50 to settle at $399.10 an ounce.
Treasury prices gained, pushing the 10-year note's yield down to 4.38 percent from 4.43 late Monday. Treasury prices and yields move in opposite directions. The dollar gained versus the yen, but fell versus the euro.
|
