Dow Ekes Out 7th Gain; Techs Jump, Banks Skid
The Dow eked out a small gain Wednesday, extending its winning streak for a seventh straight session, after Intel delivered strong earnings.
But gains were tempered by some disappointing economic news and a report that suggested 11 European banks may fail their stress tests.
The Dow Jones Industrial Average rose 3.70, or less than a tenth of a percent, to close at 10,366.72.
Cisco , Intel and Microsoft led the Dow pack. American Express and Home Depot were among the decliners.
The S&P 500 ended down less than two tenths of a point, while the tech-heavy Nasdaq finished up 0.4 percent. The CBOE volatility index, widely considered the best gauge of fear in the market, was below 25 at the closing bell.
Fed officials cut their economic growth forecast to 3 percent to 3.5 percent this year from the 3.2 percent to 3.7 percent range previously, according to minutes of their June meeting released Wednesday .
Though officials also considered taking new steps to keep the economic recovery alive, they decided against doing anything further for now.
The lowered forecast came after reports earlier in the day that retail sales declined for the second monthin a row and mortgage applications fell to a 13-year low last week despite record low mortgage rates.
Intel shares jumped 1.7 percent after the world's biggest maker of computer chips also gave an upbeat estimate for sales as it swung to a profit for its second quarter.
“In general, the earnings picture is looking pretty good,” Sam Stovall chief investment strategist at Standard & Poor’s told CNBC. “We’re expecting very strong year-over-year increases and operating results not only in this quarter, but also for the full year.”
Stovall said he expects to see an improvement in demand for semiconductors, while sees the consumer-related sector to remain an area of weakness.
Earnings reports are due out later in the week from Google , Bank of America, Citigroup and GE .
Financials were mostly lower following news about some European banks failing their stress tests. The number of banks flagged was relatively small but still raised concern about the overall health of the banking sector.
“Few people think the recession is over and that uncertainty is creating a very cautious consumer," Joel Naroff of Naroff Economics wrote in a note to clients.
And shares of major homebuilders such as Lennar and Pulte Homes fell after Goldman Sachs downgraded the homebuiling sector to "neutral" from "attractive," citing slowdown in US growth and correspondingly sluggish home sales.
Treasurys gained groundafter the latest round of 30-year bond auctions. The $13 billion sale fetched a high yield of 4.08 percent and the bid-to-cover ratio was 2.89.
Meanwhile, the Gulf oil spill continues as BP delayed its latest bid to stem the flow of oil from its leaking well.
Oil fell to $77.04 a barrelafter a government report showed that crude inventories fell and refineries boosted production.
Gold prices slipped to $1,206.80 an ounce. Meanwhile, the euro hit a two-month high against the dollar.
US-traded shares of GlaxoSmithKline rose after advisers to the FA recommended that the company's diabetes drug Avandia be allowed on the market in some form.
On Thursday, ASML will report numbers ahead of the opening bell and Marriott is expected to report after the bell today.
Volume was light, with less than 1.1 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 3 to 2.
Still to Come:
THURSDAY: PPI; Empire State survey; weekly jobless claims; industrial production; Philly Fed survey; Yellen nomination hearing; Fed's Lacker speaks; Earnings from JPMorgan, Novartis, Google and AMD
FRIDAY: CPI; consumer sentiment; Earnings from Bank of America, Citigroup, GE and Gannett
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