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Stocks Struggle to the End; Banks, Techs Gain

Published: Wednesday, 7 Oct 2009 | 5:30 PM ET

Text Size

By: Cindy Perman
Writer

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.

Major U.S. Indexes

.DJIA

.NCOMP

.SPX

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 [AA Loading... () ], 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.

DuPont [DD Loading... () ] slipped 0.3 percent after the chemicals maker said it doesn't expect earnings to match 2008 levels until 2012.

Costco [COST Loading... () ] and Family Dollar [FDO Loading... () ] 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.

FOR INVESTORS

Financials gained 1.2 percent after Wells Fargo raised its rating on Bank of America [BAC Loading... () ] 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 [JPM Loading... () ], up 1.8 percent.

Citigroup [C Loading... () ] 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 [CSCO Loading... () ] 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 deals and generally benefiting from the recovery amid pent-up demand.

Microsoft [MSFT Loading... () ] finished flat after CEO Steve Ballmer said he doesn't expect the launch of Windows 7 to boost PC sales.

Amazon [AMZN Loading... () ] 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 [AMZN Loading... () ] jumped 3.8 percent after the search engine said the worst of the advertising slump was over.

Rumor has it that News Corp. [NWS Loading... () ] 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 [BUD Loading... () ] 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 [CAR Loading... () ] 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.