Stocks little changed as earnings fail to inspire investors
NEW YORK — Stocks were flat on Wall Street as the latest round of earnings reports failed to give investors an impetus to push the market's recent rally forward.
The Dow Jones industrial average rose 7.22 points to 13,986.52 on Wednesday, after trading slightly lower for most of the day. The Standard & Poor's 500 rose 0.83 point to 1,512.12. The Nasdaq composite was three points lower at 3,168.48
Time Warner rose $2.05, or 4.1 percent, to $52.01 because the company said its net income grew 51 percent in the last three months of 2012 even as revenue was largely unchanged.
Marathon Oil Corp. fell 32 cents, or 0.9 percent, to $34.40 because its fourth-quarter net income fell 41 percent on higher exploration costs and taxes.
Stocks are consolidating their gains after surging since the start of the year. The Dow closed above 14,000 for the first time since December 2007 on Friday and had its best January in almost two decades.
The index is up 6.7 percent this year; the broader S&P 500 is 6 percent higher.
“There's no question that we need to take a pause and let reality catch up,” said Jim Russell, an investment director at U.S. Bank.
The rally started when lawmakers reached a last-minute deal at New Year's to avoid the “fiscal cliff,” a series of steep tax increases and spending cuts that would have kicked in at the beginning of the year. The gains continued on optimism that the housing market recovery is gaining momentum and that the job market is healing.
While the budget deal reached in January dealt with tax increases, it didn't tackle spending cuts.
Automatic spending cuts, which would hit everything from Defense spending to popular benefit programs, were scheduled to take effect Jan. 1, but were postponed till March 1. Russell says stocks will be unlikely to rise strongly while talks heat up in Washington over the spending cuts, which are referred to as sequestration.
The rally has pushed stocks close to record levels.
The Dow is 178 points off its record close, reached in October 2007, and the S&P is 53 points below its all-time high, achieved in the same month.
“We've had a really nice move up here, whether we graduate to the next level, I think is questionable,” said Ben Schwarz, Chief Market Strategist at Light Speed Financial. “We're looking for something to spark it.”
More than half of the companies in the S&P 500 have reported earnings for the fourth quarter, and analysts are expecting earnings for the period to rise by 6 percent, according to data from S&P Capital IQ. That puts earnings growth on track to increase for the third consecutive quarter since slowing to 0.81 percent in the second quarter of 2012.
As investors have become more comfortable holding riskier assets like stocks, they have cut their holdings in defensive investments like U.S. government bonds, sending yields on those bonds higher.
The yield on the 10-year Treasury note, which moves inversely to its price, has risen more than 20 basis points since the start of the year and is trading close to its highest level since April.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- McDonald’s localizes menus to battle growing competition
- Consider these factors before opting for longer-term auto loan
- Longer, roomier, ritzier Sedona upgrades minivan to 1st-class
- Aetna to buy rival Humana for $35B
- Airlines offer small conveniences to counter higher fees, less space
- Halliburton to close Indiana County office
- National Day Calendar lends legitimacy to pseudo-holidays
- Air control stickiness a real puzzler
- Pending home sales in U.S. climb to 9-year high
- H-D Advanced Manufacturing in Franklin Park buys aerospace components maker Firstmark
- Facebook lures premium content from YouTube