U.S. stock gains limited to Dow industrials
NEW YORK (MarketWatch) -- NEW YORK (MarketWatch) -- U.S. stocks closed mostly lower Wednesday as an earnings miss from
"Earnings are a mixed bag and we're getting a mixed reaction," said Art Hogan, a strategist at Lazard Capital Markets.
"Positive results from industrial-related companies are being partially offset by weakness in technology and the consumer space," said Lawrence Creatura, portfolio manager at Federated Investors in Rochester, N.Y. "Apple (AAPL) is the dominant contributor to the weakness in technology."
Rising as much as 115 points during the session, the Dow industrials (DJIA) rose 58.73 points, or 0.5%, to 12,676.05.
The S&P 500 index (SPX) fell nearly half a point to 1,337.89, with technology the weakest and telecommunications the strongest performer among its 10 industry groups.
The Nasdaq Composite (COMP) declined 8.75 points, or 0.3%, to 2,854.24. Without Apple's impact, the index would have finished the session with a slight gain.
"Seventy-one percent of companies that have reported so far have beat estimates, which is a little higher than average, and 40% have beaten revenue estimates, and that number is usually about 60%, so that's lower than normal," said Lazard Capital's Hogan.
"It's the better-than-expected earnings that are catching us by surprise when they shouldn't because we lowered the bar so much," he added.
Shares of Apple fell 4.3% after the consumer-technology company reported late Tuesday that fiscal third-quarter earnings and revenue came in below expectations. Read more on Apple's quarter.
Companies missing estimates and guiding lower largely involve those with 25% or more revenue exposure to Europe, according to Hogan, who noted that group includes about a third of the S&P 500. "That's the new line in the sand," he said.
"The outcomes are very company-specific in nature, and often linked to the proportion of revenue which come from overseas. In former reporting periods, high levels of international exposure was a good thing, and in this reporting period that is not always the case," Federated's Creatura said.
For every seven shares falling, eight gained on the New York Stock Exchange, where nearly 584 million shares traded. Composite volume neared 3.7 billion.
On the New York Mercantile Exchange, crude futures (CLU2) ended at $88.97 a barrel, up 47 cents, or 0.5%. The commodity spent much of the session in the red before rising to close higher for a second day.
"There is a lot of energy volatility, which is linked in the near term to the instability in Syria and other neighbor states," commented Creatura.
The Commerce Department said new-home sales fell 8.4% in June, coming in well under expectations. Read more on new-home sales.
"While a housing recovery is under way, it is most certainly not all good. Fits and starts are to be expected and clearly this summer is one of the fits," emailed Dan Greenhaus, chief global strategist at BTIG LLC.
The overall trend in housing is positive, said Hogan, who pointed out the three-month moving average is at 363,000, versus starting the year at 298,000. "Housing is the only good thing in the economic-data stream right now, and anyone who says it is bad is not looking at the whole picture."