Dow falls 83 on IBM, Intel disappointments
Big Blue and Intel represent most of the Dow's decline. Qualcomm and American Express results don't move investors. Berkshire Hathaway dips after Warren Buffett says he has cancer. Crude oil and gold move lower.
Updated: 6:02 p.m. ETStocks finished mostly lower today, weighed down by weakness in IBM (IBM) and Intel (INTC). The decline was the first this week for the major averages after two days of gains.
IBM and Intel were lower because first-quarter earnings and guidance didn't meet Wall Street estimates, with worries about Europe a contributing factor. Uncertainty ahead of an important auction of Spanish debt on Thursday also hurt stocks.
IBM's $7.32 decline to $200.13 and Intel's 52-cent drop to $27.95 subtracted about 59 points from the Dow Jones Industrial Average ($INDU), which finished down 83 points to 13,033.
In addition to the auction of 2-year and 10-year bonds in Spain, stocks on Thursday may be pressured by weakness in shares of Qualcomm (QCOM) and fast-food operator Yum! Brands (YUM) after the pair reported earnings after the close. American Express (AXP) shares were initially lower but then moved higher.
In addition to the Dow's loss today, the Standard & Poor's 500 Index ($INX) was off 6 points to 1,385, and the Nasdaq Composite Index ($COMPX) was down 11 points to 3,031.
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IBM and Intel managed to disappoint investors with their first-quarter results. Revenue for both companies was little changed from a year ago, and both cited softness in Europe overall as a real challenge. Growth in emerging markets, however, was strong. Intel projected a 62% gross profit margin in the second quarter, lower than expected.
Intel's weakness subtracted about 2 points from the Nasdaq-100 Index ($NDX), which finished down 7 points to 2,716. Apple (AAPL), down $1.36 to $608.34, contributed 1.2 points to the index's decline.
One bright spot for tech today was Yahoo (YHOO), whose shares were up 48 cents to $15.49. Late Tuesday, Yahoo posted better-than-expected first-quarter earnings of 23 cents a share on revenue of $1.08 billion. Analysts were expecting a profit of 17 cents a share on revenue of $1.06 billion. The company also gave stronger-than-expected second-quarter revenue guidance.
At the same time, Chesapeake Energy (CHK) dropped $1.06 to $18.06 after a Reuters report highlighted that CEO Aubrey McClendon has taken out large and unusual personal loans. McClendon has borrowed up to $1.1 billion in previously undisclosed loans secured against stakes in the company’s wells, raising concerns about potential conflicts of interest.
European stocks were mostly lower, especially in Spain and Italy. Spain's IBEX 35 Index ($ES:IB) was down 294 points to 7,079. It's off 17.4% this year alone.
Stocks in France, Germany and Britain also were lower. One reason, according to Bloomberg News: Bank of England policy makers said inflation may be higher than forecast.
Qualcomm drops on guidance
Qualcomm earned $1.76 billion, or 21 cents a share, on revenue of $4.94 billion in its second fiscal quarter. Revenue was up 28% from a year ago; earnings were up 17%.
The company's guidance was why shares were down $2.24, or 3.3%, to $64.75. They'd closed at $66.99, off 25 cents.
The maker of mobile telephony chips and operating systems is forecasting earnings of 83 to 89 cents a share for the quarter; the Street was looking for 90 cents. Revenue will be $4.45 billion to $4.85 billion; analysts have been expecting $4.8 billion.
American Express said it earned $1.07 a share, up 10% from a year ago, as customers used their credit cards more willingly. Net income was $1.26 billion, up 7% from a year, with revenue up 8% to $7.61 billion. The Street had expected $1 a share in earnings on revenue of $7.6 billion.
Shares of the Dow component were down 0.5% to $57.75 after hours. They'd dropped 14 cents to $58.04 in regular trading.
Yum Brands earned 96 cents a share on revenue of $2.74 billion. Earnings were up 78% from a year ago, and revenue was up 13% from a year ago. But shares were lower after hours because revenue growth in China was up 14% from a year ago. Analysts had expected sales growth in China to be at least 15%, Reuters said.
Shares were off 69 cents, or 1%, to $72.25 from a regular close of $72.94.
The star of the after-hours reports was eBay (EBAY), whose shares were up $2.95, or 8.2%, to $38.80 after closing down 21 cents to $35.87 in the regular session.
EBay's first-quarter earnings rose 20%, and the company raised its 2012 profit forecast to $2.30 to $2.35 a share. It also expects to earn 53 cents to 55 cents in the second quarter.
Also enjoying a strong after-hours session: F5 Networks (FFIV), up 7.3% to $132.51 after closing at $124.21, up 46 cents. The company projected a 20% revenue gain this year. Fiscal-second-quarter earnings were $1.09 a share. The consensus estimate had been $1.07.
On tap: Bank of America, DuPont, Microsoft and Verizon
Thursday is a huge day for earnings with four Dow components set to report: Bank of America (BAC), DuPont (DD), Microsoft (MSFT) and Verizon Communications (VZ).
Also reporting: Chipotle Mexican Grill (CMG), Freeport-McMoRan Copper & Gold (FCX), Morgan Stanley (MS), Sherwin-Williams (SHW) and Union Pacific (UNP).
Economic reports include the weekly report on jobless claims, the March existing-home-sales report from the National Association of Realtors and the Conference Board's March report on leading economic indicators. Lastly, the Philadelphia Federal Reserve Bank issues its April report on Manufacturing.
Futures trading suggests a modest rally at the open, but Spain could change matters.
| Energy prices -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Crude oil (-CL) | $102.67 | $104.20 | -0.34% | 3.89% | ||||||||
| (per barrel) | ||||||||||||
| Heating oil (-HO) | $3.1182 | $3.1266 | -1.64% | 7.00% | ||||||||
| (per gallon) | ||||||||||||
| Natural gas (-NG) | $2.0420 | $2.0480 | -3.95% | -31.68% | ||||||||
| (per mil. BTU) | ||||||||||||
| Unleaded gasoline (-RB) | $3.2027 | $3.2340 | -3.19% | 20.52% | ||||||||
| (per gallon) | ||||||||||||
| Brent crude | $117.97 | $118.78 | -4.00% | 9.86% | ||||||||
| (per barrel) | ||||||||||||
| Retail gasoline | $3.8990 | $3.9040 | -0.66% | 19.02% | ||||||||
| (per gallon; AAA) | ||||||||||||
Buffett's cancer disclosure hits Berkshire shares
Berkshire Hathaway's Class A shares (BRK.A) shares were off $1,560 to $119,750 today after CEO Warren Buffett disclosed he has stage 1 prostate cancer. The Class B shares (BRK.B) were off $1.02 to $79.74.
In a letter to shareholders, Buffett, 81, said the disease is not life-threatening, and he "feels great."
Still, the announcement has increased calls for the 81-year-old Buffett to announce whom he has chosen as a successor. Buffett has said he has a successor in mind but has not identified the candidate.
Berkshire Hathaway has a market capitalization of some $197 billion, 11th largest in the world.
Most stocks in the major averages are lower
In fact, only seven of the 30 Dow stocks were higher today, led by Hewlett-Packard (HPQ), Caterpillar (CAT) and Pfizer (PFE). IBM and Intel were the laggards.
Only 132 S&P 500 stocks were higher, led by Intuitive Surgical (ISRG) and Western Digital (WDC), up $38.99 to $584.52 and $2.05 to $41.56, respectively.
Wynn Resorts (WYNN) was up $5.51 to $130.28 on a report suggesting that the potential approval of a new casino in Macau could boost the value of the company considerably.
Genworth Financial (GNW) was the laggard; the company postponed an initial public offering of its Australian unit that backs home loans to early 2013 after "elevated" losses in the nation this year.
Intuitive Surgical and Seagate Technology (STX) were the Nasdaq-100 leaders. Troubled solar-panel maker First Solar (FSLR) was the laggard, despite several upgrades.
Crude oil and gold move lower
Crude oil (-CL) fell $1.66 to $102.54 a barrel after the Energy Department reported a larger-than-expected increase in domestic inventories. Brent crude was down $1.45 to $117.33.
The national retail price of unleaded gasoline was $3.899 a gallon, according to AAA's Daily Fuel Gauge Report. It was the first time the price has been below $3.90 since March 27.
Gold (-GC) settled down $11.50 to $1,639.60 an ounce. Silver (-SI) was down 12 cents to $31.49 an ounce, and copper (-HG) was off 1.6 cents to $3.631 a pound.
Interest rates were lower, with the 10-year Treasury yield falling to 1.986% from 2.009% on Tuesday. The dollar was higher against major currencies.
| Short hits from the markets -- New York close | ||||||||||||
| Wed. | Tues. | Month chg. | YTD chg. | |||||||||
| Treasury yields | ||||||||||||
| 13-week Treasury bill | 0.0700% | 0.070% | 0.00% | 600.00% | ||||||||
| 5-year Treasury note | 0.848% | 0.863% | -18.70% | 2.17% | ||||||||
| 10-year Treasury note | 1.982% | 2.009% | -10.56% | 5.93% | ||||||||
| 30-year Treasury bond | 3.126% | 3.155% | -6.55% | 8.20% | ||||||||
| Currencies | ||||||||||||
| U.S. Dollar Index | 79.674 | 79.627 | 0.68% | -1.05% | ||||||||
| British pound | 1.6028 | 1.5934 | 0.11% | 3.16% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in pounds | £0.624 | £0.628 | -0.11% | -3.06% | ||||||||
| Euro in dollars | $1.31 | $1.31 | -1.67% | 1.27% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. $ in euros | € 0.762 | € 0.762 | 1.69% | -1.26% | ||||||||
| U.S. $ in yen | 81.43 | 80.89 | -1.87% | 5.62% | ||||||||
| U.S. $ in Chinese | 6.32 | 6.30 | 0.04% | -0.05% | ||||||||
| yuan | ||||||||||||
| Canada dollar | $1.009 | $1.010 | 0.70% | 2.88% | ||||||||
| (in U.S. $) | ||||||||||||
| U.S. dollar | $0.992 | $0.990 | -0.68% | -2.80% | ||||||||
| (in Canadian $) | ||||||||||||
| Commodities | ||||||||||||
| Gold (-GC) | $1,639.60 | $1,651.10 | -1.93% | 4.65% | ||||||||
| (per troy ounce) | ||||||||||||
| Copper (-HG) | $3.631 | $3.647 | -5.07% | 5.68% | ||||||||
| (per pound) | ||||||||||||
| Silver (-SI) | $31.4870 | $31.3674 | -3.07% | 12.80% | ||||||||
| (per troy ounce) | ||||||||||||
| Wheat (-ZW) | $6.1075 | $6.1550 | -7.57% | -6.43% | ||||||||
| (per bushel) | ||||||||||||
| Corn (-ZC) | $6.0175 | $6.168 | -6.56% | -6.92% | ||||||||
| (per bushel) | ||||||||||||
| Cotton | $0.9002 | 0.8825 | -4.15% | -1.81% | ||||||||
| (per pound) | ||||||||||||
| Coffee | $1.750 | 1.747 | -5.41% | -23.80% | ||||||||
| (per pound) | ||||||||||||
| Crude oil (-CL) | $102.67 | $104.20 | -0.34% | 3.89% | ||||||||
| (per barrel) | ||||||||||||
Economic reports include the weekly report on jobless claims, the March existing-home-sales report from the National Association of Realtors and the Conference Board's March report on leading economic indicators. Lastly, the Philadelphia Federal Reserve Bank issues its April report on Manufacturing.
I have no doubt that the jobless claims numbers will be reported lower than expected but I question the truthfullness of the report as it is nothing more than an attempt to make things look better than they really are. Secondly, the existing-homes sales numbers will show an uptick but again it is fabricated lies by the National Association of Realtors who are notorious for reporting false numbers. All propaganda...pure and simple. Those in control need to do some "spinning" tomorrow to get back today's losses.
Those so called Bush tax cuts for the wealthy are soon going to expire, but what is funny most storys are saying that it will hit low and middle income families the hardest, now that is interesting, think about it all we hear from the MSNBC shows on tv is that "Republicans are only concerned for the wealthy and corporations", BUT Bushs' tax cuts will expire and hurt the low and middle class the hardest.
Talk about spin eh? Lame Stream Media at it's finest.
Keep up the good work just repeating the drivel there Maximus.
In 2009 Bush gives Obama a first year deficit of 1.3 trillion before Obama was signed into office and projected shortfalls of 8 trillion over the next decade.
offthedole...
From the Washington Post: "The Romneys sent somewhat less to Washington over that period, paying an estimated $6.2 million in federal income taxes. According to his 2010 return, Romney paid about $3 million to the IRS, for an effective tax rate of 13.9 percent. For 2011, Romney estimates that he will pay about $3.2 million, for an effective rate of 15.4 percent."
The guy made about 20.9 million last year. He pays his taxes as required by law. So what's the issue with him? He's a business man who knows what the heck he's doing, making money and giving to charity as well. The current administration is befuddled in continuous scandle, promoting big shot CEO's like GE's Jeffrey Immelt at the head of the Economic Advisory Board, and he still retains his position at GE. this is so the Whitehouse can be more "business friendly" (Wikipedia, 2012).
I would rather have a candidate who IS business friendly and savy, that can re-shape our current climate of nepotism and loathing of the Capital.
In 2009 Bush gives Obama a first year deficit of 1.3 trillion before Obama was signed into office and projected shortfalls of 8 trillion over the next decade.
doda52, when you are very active in business and own multiple companies that produce income and losses, some of thos entities may have different fiscal year ends, so in order to properly capture the income produced by the company and passed to the individual (via a K-1 for example) you have to wait to file your personal until your other companies reach their fiscal year end. Their are many other reasons to extend; so you shouldn't read anything negative into Romney filing an extension.
Also, if you want a good idea of what his tax return will look like for this year, just look at his 2010. It will probably be very similar especially since he states that he is not active in his old company; so with Romney living off capital gains and such, there probably isn't a tremendous difference in the two years.
Why is it that when they sell the price go down? What's the use of it all reaching the top if only a few sellers are able to get the top price.I have learned that from the Republican's that whine that it's all Obama's fault. What's good for the Goose is good for the Gander.
You're whinning again.Just once try to write something without whinning. It'd difficult the 1st time but gets better with practice.
This in not directed at you but is for all of us. We're too great of a nation to be reduced to whiners.
"Crude oil was down $1.66 to $102.54 a barrel after the Energy Department reported a larger-than-expected increase in domestic inventories."
Wow, somehow I don't believe this information was realized. The Energy Dept already knew that the oil inventory was higher than expected. That's my opinion, so I don't get inot trouble.
fiscally incompetent morons
Max when you type drivel like this, do you realize who you are talking about? As President Obama has declared, "congress has the purse strings". Now a little lesson in history, who was in charge of Congress the First of 2007? Let me answer, the Democrats took control of both houses of congress, now what major event happened during this time frame? Oh I know it was "The worst recession since the great depression". So since the Republicans took over Jan 2011 the economy has been improving, if the Democrats want to start spinning that story I guess we need to thank the Republicans, I just wish they could've won back the Senate
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