Stocks edge down at the start of big earnings week
THE ASSOCIATED PRESS April 22, 2013 8:08AM
In this Tuesday, April 16, 2013, photo, Trader Peter Costa works on the floor of the New York Stock Exchange. World markets rose higher Monday, April 22, 2013 with Tokyo stock markets heading close to a five-year high after a meeting of global finance leaders lent support to Japan's aggressive monetary policy. (AP Photo/Richard Drew)
Updated: April 22, 2013 3:55PM
The stock market edged higher on Monday as energy stocks got a lift from recovering oil prices and investors focused on results from a key industry player.
The industry climbed 1.3 percent, making it the biggest gainer in the Standard & Poor’s 500 index. Oil rose 75 cents, or 1 percent, to $88.76 a barrel Monday. A week ago, crude fell below $90 a barrel for the first time this year after reports that China’s economic growth slowed.
The Dow Jones industrial average rose 26 points, or 0.2 percent, to 14,571 as of 2:50 p.m. EDT. The Standard & Poor’s 500 index advanced eight points, or 0.5 percent, to 1,563.
Oil services company Halliburton gained after it reported a loss that wasn’t as bad as analysts had expected. Halliburton rose $2.02 to $39.23.
Investors will be watching a cluster of company earnings this week.
About a third of the companies in the Standard & Poor’s 500 index, including Exxon Mobil and Apple, are reporting earnings this week. Analysts expect company profits to rise by 2 percent in the first quarter from a year earlier. That is down from the 7.7 percent growth in the fourth quarter, according to S&P Capital IQ.
While the majority of companies that have reported earnings so far have beaten investors’ expectations, concerns remain about the outlook for revenues for the rest of the year. Investors’ forecasts for earnings growth may have to be pared back unless the global economy starts to revive.
“Most of the companies seem to be coming in ahead of earnings expectations, but the thing that’s still problematic is the revenue line,” said Bill Stone, chief investment strategist at PNC Wealth Management. “To me it’s just symptomatic of the global economy continuing to sputter along.”
Stocks had their biggest weekly drop in five months last week on concern that global growth is slowing. Both the S&P 500 and the Dow lost 2.1 percent, paring their advances after a strong start to the year.
Caterpillar rose $2.5 to $82.44. The company initially fell Monday after lowering its forecasts for full-year sales and profits because its mining business is slowing. The maker of mining and construction equipment also said that its profit shrank 45 percent. The company plans to buy back about $1 billion of its stock, resuming stock repurchases for the first time since 2008.
Netflix, which is set to report earnings after the close of the market Monday, rose $11.06 to $174.30.
Traders and investors appear more likely to punish companies that miss expectations, rather than reward companies that beat them, Goldman Sachs said. According to the investment bank’s research, while 63 percent of stocks that beat analysts’ forecasts last week performed better than the overall market the next day, 73 percent of those that missed targets performed worse.
“If you look at this earnings season in general, it’s been disappointing,” said Ryan Detrick, a senior technical strategist at Schaeffer’s Investment Research. “The outlook and the revenues are the big concern.”
Hasbro, the maker of Transformers and My Little Pony, rose $1.31 to $46.34 after posting a performance that was better than expected.
Sales of previously occupied U.S. homes dipped in March, the National Association of Realtors said Monday. That also weighed on the market. Sales slipped to a seasonally adjusted annual rate of 4.92 million, from 4.95 million in February.
In other trading, the Nasdaq composite gained 20 points, or 0.6 percent, to 3,201.
In government bond trading, the yield on the 10-year Treasury note fell to 1.70 percent from 1.71 percent late Friday as traders shifted money into lower-risk assets.
Among other stocks making big moves;
General Electric fell 50 cents to $21.25 after JPMorgan cut its rating on the company to “neutral” from “overweight.” The company’s stock fell Friday following pessimistic comments from its CEO on the outlook for Europe and the company’s core industrial operations.