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Stocks Close Mostly Lower Amid Disappointing Quarterly Results - U.S. Commentary

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US Market Commentary

Stocks Close Mostly Lower Amid Disappointing Quarterly Results – U.S. Commentary
11/20/2009 4:44 PM ET

TOP MARKET NEWS

Stocks Close Mostly Lower Amid Disappointing Quarterly Results - U.S. Commentary

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(RTTNews) - Stocks moved mostly lower on Friday, as a lack of significant economic catalysts gave traders the further opportunity to cash in on recent gains ahead of next week’s deluge of data. The major averages all closed in negative territory, slipping further away from Tuesday’s yearly highs.

The weakness in the markets was partly due to disappointing quarterly results from computer marker Dell (DELL), which reported third quarter earnings that fell to $0.17 per share from $0.37 per share in the year-ago quarter. Excluding one-time items, the company earned $0.23 per share compared to analyst estimates of $0.28 per share.

Revenue for the quarter fell 15 percent to $12.9 billion, coming in below analyst estimates of $13.18 billion. Looking forward, Dell said it expects fourth quarter revenue to improve over the third quarter.

Homebuilder D.R. Horton (DHI) also released results that disappointed investors, reporting a fourth quarter net loss of $0.73 per share compared to a loss of $2.53 per share in the year-ago quarter. Analysts had expected the company to report a loss of $0.30 per share.

In other corporate news, mobile phone giant Nokia Corp. (NOK) said this morning that it plans to align its research and development operations in Finland and Denmark, effectively eliminating up to 330 R&D jobs.

On the global economic front, the Bank of Japan unanimously decided to retain the overnight call rate at 0.1 percent, in line with economist expectations. The last change in the rate was a 0.1 percentage point cut in interest rates at the December 2008 meeting.

While the Dow briefly peeked above the unchanged line in the final hour of trading, the major averages all ended the day in the red. The Dow closed down by 14.28 points or 0.1 percent at 10,318.16, the Nasdaq fell by 10.78 points or 0.5 percent to 2,146.04 and the S&P 500 slipped by 3.52 points or 0.3 percent to 1,091.38.

Amid some profit taking over the past few sessions, the major averages closed on a mixed note for the week. The Dow posted a weekly gain of 0.5 percent, while the Nasdaq fell 1.0 percent and the S&P 500 posted a more modest 0.2 percent weekly loss.

Sector News

Housing stocks saw some of the day’s steepest losses, with the Philadelphia Housing Sector Index falling by 2.6 percent. D.R. Horton helped to lead the sector lower, plunging by 15.4 percent to a four month closing low after reporting a wider than expected fourth quarter loss.

Computer hardware stocks also fell by substantial margins, with the NYSE Arca Computer Hardware Index posting a loss of 1.4 percent. Despite the pullback, the index remained in a range.

Dell was one of the sector’s worst laggards, dropping by 10 percent and setting a three-month closing low. The downside came after the compute maker reported third quarter earnings and revenues that fell that fell short of estimates.

Significant weakness was also visible among oil service stocks, which moved lower along with the price of crude oil. Some networking, semiconductor, and gold stocks also posted notable losses, although most ended the day well off their worst levels of the day.

Dow Components

Caterpillar (CAT) was one of the Dow's worst performers, falling by 1.1 percent. The loss dragged the stock further off of Monday's yearly high. General Electric (GE), Cisco (CSCO) and 3M (MMM) also declined, giving back some recent gains.

Meanwhile, drug maker Merck (MRK) was able to extend its recent winning streak, recording a gain of 3.2 percent on the day. The stock was able to rise for a sixth straight session, closing at its best price in sixteen months.

Pfizer (PFE) and Coca-Cola (KO) also advanced on the day, climbing by 1.4 percent and 1.1 percent, respectively, setting their best closing levels in over a year.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly lower on Friday. Japan's benchmark Nikkei 225 Index fell by 0.5 percent, while Hong Kong's Hang Seng Index closed down by 0.8 percent.

The major European markets also closed moderately lower, with the U.K.'s FTSE 100 Index falling by 0.3 percent, while the French CAC 40 Index and the German DAX Index closed down by 0.8 percent and 0.7 percent, respectively.

In the bond markets, treasuries ended the day little changed after showing a lack of direction throughout the session. Subsequently, the yield on the benchmark ten-year note closed at 3.356 percent, up less than a basis point on the day.

Looking Ahead

Next week, traders are likely to focus on data on new and existing home sales, consumer confidence, and the latest revision to third quarter GDP, along with the customary jobless claims report.

However, trading activity may be somewhat subdued next week due to the Thanksgiving Day holiday on Thursday.

For comments and feedback: contact editorial@rttnews.com

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