Mixed Earnings Put Wall St in Limbo
Wall Street recorded little change by mid-afternoon on yesterday as cautious investors kept their powder dry while absorbing a mixed bag of second-quarter earnings reports and economic information.
The Dow Jones Industrial Average edged down 0.1 per cent to 10,196.63, while the S&P; 500 rose 0.4 per cent to 1,111.83. The Nasdaq tacked on 0.3 per cent to 1,919.58.
Nokia tumbled 12.2 per cent to $12.51 as the handset maker warned that third-quarter sales and profits would drop. Investors ignored better-than-expected second-quarter results.
Market watchers said the shock might have worried markets more had there not been extremely encouraging results from a few other tech companies to offset the blow. Apple Computer leapt 11.6 per cent to $33.01 as investors applauded its tripling of profits, thanks to roaring sales of its iPod digital music players.
Shares in SanDisk, the maker of flash memory cards used in digital music players, shot up 24.6 per cent to $24.90, on a 73 per cent jump in profits and rosy predictions for the third quarter.
Investors were also focused on tech giant IBM, which was due to report results after the close. As concerns about a possible slowdown in business spending emerge, investors are placing more importance on forecasts from tech leaders. Shares were down 0.15 per cent to $83.98.
Peter Boockvar, equity strategist at Miller Tabak, said the market was having difficulty finding a direction, since it had been unable to capitalise on any of the short-lived rallies since earnings season began. "That makes me believe the next big move will be down," he said, adding that the S&P; 500 was drifting around the midpoint of its recent tight trading range of around 1,080 to 1,1140. "The market is hanging here, which is indicative of a lack of conviction," he said.
Citigroup, the world's biggest financial services company, fell 2.4 per cent to $44.38 as investors reacted to news that its second-quarter profit had plunged 73 per cent after the company set aside $4.95bn for legal costs. They shrugged off the company's 15 per cent increase in revenues.
Elsewhere in financial services, Wachovia, the fourth-biggest US bank, edged down 0.7 per cent to $44.38 after reporting a 21 per cent rise in profits on a robust consumer lending business. In spite of a slew of upbeat results from regional banks on strong demand for consumer loans, investors have been unmoved, fearing that rising rates will bring an end to the industry's rosy profits.
PepsiCo shares dipped 2.5 per cent to $52.08 as investors overlooked the company's 12 per cent profits growth in the second quarter and reacted to the fact that the company's full-year forecast came in slightly below expectations.
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