Strong corporate earnings results helped the Dow and S&P 500 settle in the green, whereas selling pressure on Apple left the Nasdaq languishing in the red. It was the Dow alone which gained significantly, while the S&P 500’s choppy run ended with marginal gains during the final hours.
The Dow Jones Industrial Average (DJI) gained 0.6% to settle at 13,001.56. The Standard & Poor 500 (S&P 500) edged up 0.4% to finish yesterday’s trading session at 1,371.97. The tech-laden Nasdaq Composite Index dropped 0.3% to close at 2,961.60. The CBOE Volatility Index (VIX) dropped 4.6% to settle at 18.10. Consolidated volumes on the New York Stock Exchange, the Nasdaq and American Stock Exchange were roughly 6.2 billion shares, lower than this year’s average daily volume of about 6.8 billion shares. On the NYSE, the advancers had a better run than the decliners; as for every stock that declined, roughly two stocks ended in positive territory.
The Dow was the only benchmark which seemed set to chalk up gains, since key blue-chip components posted strong earnings and also provided optimistic projections. AT&T, Inc. (NYSE:T), United Technologies Corp. (NYSE:UTX) and 3M Co. (NYSE:MMM) reported strong numbers, strengthening the Dow and lifting the broader sentiment. While investors received a boost from earnings surprises, sentiment improved further following positive projections. For instance, 3M Company upped its full-year 2012 earnings outlook to $6.35 - $6.50 per share from its earlier projection of $6.25 - $6.50. Other Dow components joined the party and stocks like E. I. du Pont de Nemours and Company (NYSE:DD), General Electric Company (NYSE:GE), and Verizon Communications Inc. (NYSE:VZ) jumped 1.7%, 2.5% and 2.4%, respectively, to lead the gains.
The Hershey Company (NYSE:HSY) and Regions Financial Corp. (NYSE:RF) also reported robust figures. Shares of Hershey and Regions Financial surged 5.7% and 5.9%, respectively, following their earnings results and helped the S&P 500 retain its place in the positive zone. Earnings have remained mostly positive till now. Thomson Reuters Proprietary Research confirmed this trend stating that over three-fourth of the 153 S&P 500 companies that have reported till now have surpassed the Street’s estimates.
Coming back to AT&T’s earnings, the second-largest mobile service provider in the U.S. said they have activated a significantly lower number of Apple Inc.’s (NASDAQ:AAPL) iPhones. This had investors worried about Apple’s financials as the tech bellwether was due to report its earnings results after the closing bell. As investors pondered over AT&T’s statement, shares of Apple dropped 2.0% during the trading hours. The fortunes of Apple’s often guide the Nasdaq index, and yesterday’s decline in its shares dragged down the tech-laden index.
Also weighing on Nasdaq was the 13.9% slump in stocks of Netflix, Inc. (NSDAQ:NFLX). The movie rental and online streaming company did top the Street’s estimates, but its first-quarter 2012 loss per share of 8 cents remained well below earnings per share of $1.11 in the prior-year quarter. More importantly, what spooked investors was the cautious, rather, dismal projection of subscriber growth in upcoming quarters. Management expects subscriber decline in the DVD business to continue in the forthcoming quarters.
Markets witnessed the release of some economic data, but the day was mostly dominated by the corporate results and these reports had little impact. The S&P/Case-Shiller Home Price Indices reported declines of 3.6% and 3.5% for the 10- and 20-City Composites, respectively, in February. The 3.5% decline was the lowest 12-month fall since early 2011.
Meanwhile, the U.S. Department of Housing and Urban Development jointly released data on sales of new single-family houses in March 2012, which was came in at a seasonally adjusted annual rate of 328,000, down 7.1% from the revised February rate of 353,000. Consensus estimates had projected the figure at 318, 000.
Separately, The Conference Board reported that the Consumer Confidence Index was ‘virtually unchanged in April’. According to the report: “The Index now stands at 69.2 (1985=100), down slightly from 69.5 in March. The Expectations Index declined to 81.1 from 82.5, while the Present Situation Index improved to 51.4 from 49.9 last month”.