Stocks wobbled Thursday after some disappointing earnings news.
Pfizer was the Dow's biggest decliner after the drug maker missed expectations. Fellow Dow component United Technologies and online auctioneer eBay added to the gloom with cautious outlooks.
It was a stark contrast from Wednesday, when encouraging results from Intel and JPMorgan propelled stocks to their best one-day gains in two weeks.
"Every day is a different day when you're looking at earnings," Peter Costa, of Eckhart & Co., told CNBC. "You've got to look at the much-bigger picture ... the dollar still stinks, oil's at $114 a barrel." Earnings season will be tough but "We'll get through it," Costa said. "We've got to get through ... the next week and a half and then we'll see where the market goes from there."
Costa said the Dow may have been down 150 to 170 points today, but IBM's results cushioned the selling.
Adding to the dismal mood was a report from the Philadelphia Federal Reserve that showed its gauge of regional manufacturing activity, contracted for a fifth straight month. The Philadelphia report is widely seen as a precursor to the ISM's national reading on manufacturing, due out on May 1. Among other data points, the Conference Board's leading indicators index ticked up 0.1 percent in March, snapping a five-month losing streak, and initial jobless claims rose by 17,000 last week, less than the 20,000 expected.
"The most impressive thing is how resilient this market has been in light of all the bad news we've had," said Charles Massimo, founder of CJM Fiscal Management. "I think the market has decided that the worst is behind us," Massimo said. "Let's face it, other than a WaMu, Merrill Lynch or somebody else coming out and waving the white flag ... it can't get much worse."
The next few weeks will bring more positive surprises, Massimo said, bringing a "sudden and violent" upside to the market that may catch some investors off-guard.
Pfizerfell short of its earnings targetas competition from generic medications hit its prescription drug business, particularly that of its cholesterol buster, Lipitor.
Swiss drug maker Roche also missed forecasts with an increase of just 2 percent in first-quarter sales in local currencies, hit by plunging Tamiflu revenue and a slowing pace of growth for cancer drugs.
Diversified manufacturer and Dow component United Technologies reported an earnings gain of 22 percent, beating expectations, but shares declined after the company, which makes everything from Otis elevators to Black Hawk military helicopters, held its full-year outlook steady and warned of a slowdown.
(Check out all the latest earnings news and
Merrill Lynch reported a loss -- including preferred stock dividends -- of $2.14 billion, or $2.19 a share, compared with a profit of more than $2 billion a year earlier. The loss from continuing operations was $2.20 per share, more than the $1.96 analysts had expected, according to Reuters Estimates.
Merrill also took writedowns totaling $4.5 billion for the quarter and said it plans to cut 4,000 jobs. Sources tell CNBC that the investment bank may need to raise additional capital, despite contrary remarks last week from CEO John Thain.
Still, Merrill shares roseamid speculation that now the worst may be behind for the brokerage firm.
JP Morgan Chase, which reported better than expected resultson Wednesday, is planning to sell $6 billion in non-cumulative perpetual preferred shares, according to a report in International Financing Review, a Thomson publication.
IBM , the biggest gainer on the Dow, reported after the closing bell Wednesday that net income rose 26 percentto $2.32 billion. Total revenue, of which two-thirds comes from outside the U.S., increased 11 percent. Shares jumped in after-hours trading as two key metrics met expectations: hardware and services sales. Analysts had been concerned that, since a quarter of services revenue comes from financial firms, it might fall short, but it didn't.
Big Blue also raised its outlook again. In a statement accompanying the earnings report, CEO Sam Palmisano said, "We feel good about the rest of the year."
That followed earnings earlier in the week from Intel. The chip maker met earnings expectations and raised its forecast for the current quarter, saying it expects sales of $9 billion to s$9.6 billion, compared with current estimates of $9.24 billion.
Online auctioneer eBay also beat expectations, with a 22 percent increase in net income. The company, which is in the midst of an overhaul to promote long-term growth, also boosted it its 2008 revenue forecastby 2 to 3 percent, pegging revenue between $8.7 and $9 billion. However, the stock skidded Thursday as traders focused on fact that eBay's core business remains weak.
Earnings from the world's biggest handset maker, Nokia , were in line but shares fell when the company lowered its outlook. The Finnish company cited the weak dollar for its weaker forecast but said it still expects a boom in emerging markets will help boost demand this year.
Google shares slipped ahead of its earnings report, due out after the closing bell. The Internet-search giant is expected to post earnings of $4.52 a share, a 23-percent increase from a year earlier, on revenue of $3.608 billion. Investors will be looking to see whether Google, like eBay, will warn that weakness is seeping online. (Click here for a Google earnings preview.)
THURSDAY: Fed's Kohn, Fisher speak; Capital One, Google earnings after the bell
FRIDAY: Caterpillar, Citigroup, Honeywell, Xerox earnings; Fed's Lacker, Rosengren speak
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