Stocks Retreat as Techs Drag; Apple Jumps
Stocks struggled Wednesday as Morgan Stanley and Apple smashed earnings expectations but weakness in techs and retailers dragged on the market.
The Dow Jones Industrial Average toggled between positive and negative territory today after two straight gains. There was some speculation that yesterday's gain was due to rumors that the Fed may take steps to help loosen up lending — perhaps that it might eliminate interest paid on excess bank reserves held at the Fed.
Federal Reserve Chairman Ben Bernanke is set to begin his semi-annual economic testimony before Congress at the Senate Banking Committee at 2 pm ET today, instead of the usual 10 am. Investors will be looking for clues on the Fed's outlook for the economy and fiscal policy.
Apple shares jumped 2 percent after the iPod maker reported record revenue numbers.
JPMorgan raised its price target on Apple to a whopping $400. That stock is currently trading around $250.
But tech stocks overall were weak, with Yahoo. down more than 8 percent after a disappointing earnings report. Citigroup downgraded its rating on the stock to "hold" from "buy" amid worries about weak revenue.
Results are due out from eBay, telecom chip maker Qualcomm and Starbucks after the bell.
Lenovo is apparently planning to launch a tablet PC that uses Google's Android operating system, internally referred to as LePad, to compete with Apple's iPad.
Banks rallied after some solid earnings out of the sector. Morgan Stanley rose after the bank easily beat estimatesand Wells Fargo jumped after its own strong report.
But Goldman Sachs shares struggled as several brokerages downgraded their full-year forecasts for the bank after revenue disappointedwhen it reported results on Tuesday. KBW raised its rating to "outperform" and its price target to $190 on the stock, but reduced its full-year earnings forecast to $14.80 a share. Four other brokerages also lowered their forecasts.
Shares of Dow component Coca-Cola gained over 2 percent after the company beat earnings estimates with a profit of $1.06 a share.
Former Dow component Altria rose after the company hit its target with earnings of 50 cents a share.
BP shares rose after the oil giant denied a report that CEO Tony Hayward would soon step down, a day after confirming $7 billion in asset sales to help meet the cost of the Gulf cleanup.
Walmart ticked higher despite the fact that the world's largest retailer faces a potentially costly class-action lawsuit in Colorado accusing it of trying to limit health care compensation for injured employees.
And the Wall Street Journal reports that AIG has chosen Goldman Sachs and Morgan Stanley to coordinate an IPO for its Asian unit, AIA.
- Peter Schacknow contributed to this report.
Still to Come:
WEDNESDAY: Bernanke testifies before Congress; weekly crude inventories; earnings from eBay and Qualcomm after the bell
THURSDAY: ECB meeting; weekly jobless claims; Fed's Dudley speaks; existing-home sales; leading indicators; earnings from AT&T, Caterpillar, 3M, Travelers, UPS, BB&T, Fifth Third, KeyCorp, Nokia, PNC Bank, SunTrust, Amazon, American Express, Microsoft and Capital One
FRIDAY: EU bank stress-test results; earnings from Ford, McDonald's
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