Stocks Struggle to the End; Banks, Techs Gain
Stocks struggled to the very end Wednesday as banks and techs gained but investors took a wait-and-see approach ahead of the start of earnings season.
The Dow Jones Industrial Average shed about 5 points, or less than a tenth of a percent. The S&P 500 rose 0.2 percent and the Nasdaq gained 0.3 percent.
Techs started to push higher after an analyst upgrade on Cisco. Banks also gained after a couple of upgrades on the sector recently as analysts say stocks valuations are too low for earnings potential.
This comes after a two-day rally, in which stocks gained 2.6 percent, as recent data points have revitalized optimism about the recovery.
Earnings season unofficially kicked off after the bell today, with the first Dow component, Alcoa, reporting after the bell.
Analysts say companies are going to have to bring it this quarter: They're looking for revenue growth, not just an improved bottom line due to cost-cutting measures. Plus, they'll also be looking at companies' outlooks for signs of the recovery.
And that's exactly what Alcoa delivered: The aluminum giant beat on both earnings and revenue.
Alcoa was the biggest gainer on the Dow, up 2.2 percent, during regular trading, and
After the bell, the stock jumped more than 5 percent.
Still, the overall season is expected to be bumpy: The current expectations are for a 25-percent drop in the blended earnings of S&P 500 companies.
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DuPont slipped 0.3 percent after the chemicals maker said it doesn't expect earnings to match 2008 levels until 2012.
Costco and Family Dollar beat expectations this morning, an encouraging sign for the retail sector ahead of September chain-store sales, due out tomorrow.
Analysts say a few retailers could beat tomorrow, helped by a cool September.
Financials gained 1.2 percent after Wells Fargo raised its rating on Bank of America to "outperform," the latest in the string of upgrades on the sector.
Bank of America was the second-biggest percentage gainer on the Dow, up 2.1 percent, followed by JPMorgan , up 1.8 percent.
Citigroup shed 0.6 percent. The bank is said to be exploring a possible sale of its Phibro commodities unit — that's the one with the star trader due a $100 million pay package.
Cisco gained 1.1 percent after a William Blair analyst upgraded his rating on the stock to "outperform" from "market perform." The analyst said Cisco is winning new dealsand generally benefiting from the recovery amid pent-up demand.
Microsoft finished flat after CEO Steve Ballmer said he doesn't expect the launch of Windows 7 to boost PC sales.
Amazon was the top percentage gainer on the Nasdaq, up 3.4 percent, after the online marketplace lowered the price of its Kindle e-reader, while expanding its marketing overseas.
Google jumped 3.8 percent after the search engine said the worst of the advertising slump was over.
Rumor has it that News Corp. chief Rupert Murdoch is in Asia right now, scouting out potential partners for his own e-reader. Shares of News Corp. rose 0.7 percent.
Anheuser-Busch InBev announced that it's selling its theme-parks division, which include SeaWorld and Busch Gardens, to private-equity firm Blackstone Group for at least $2.3 billion.
Avis Budget Group dropped 5.9 percent after the car-rental company warned that a transaction against it could impact earnings. Avis on Tuesday offered $250 million in notes along with a warrant transaction.
And Burger King rose 1.2 percent after the fast-food chainannounced an extensive revamp of its 12,000 worldwide locations.
It was light on the economic news today but a couple of quick points: Mortgage applications rose to their highest level since mid-Mayas interest rates continued to drop.
And consumer borrowing fell for a seventh straight monthas more Americans opted to pay off debt and banks cut credit-card limits.
Volume was below average, with 1.09 billion shares changing hands on the New York Stock Exchange. Advancers outpaced decliners, roughly 15 to 13.
Still to Come:
THURSDAY: Chain-store sales; foreclosure report; BOE, ECB rate decisions; weekly jobless claims; wholesale trade; Fed's Hoenig speaks; Earnings from Pepsi, Marriott, Chevron (interim)
FRIDAY: Market peak 2-year anniversary (Dow at 14,164.53); international trade
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