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Mixed Earnings News Leads To Choppy Trading On Wall Street - U.S. Commentary

wallstreet4 103112 22Jan14

Stocks turned in a lackluster performance throughout the trading day on Wednesday, extending the trend seen over the past several sessions. The choppy trading came as traders digested another mixed batch of earnings news.

The major averages eventually closed mixed for the fourth consecutive session. While the Dow fell 41.10 points or 0.3 percent to 16,373.34, the Nasdaq rose 17.24 points or 0.4 percent to 4,243.00 and the S&P 500 inched up 1.06 points or 0.1 percent to 1,844.86.

The lack of direction shown by stocks came as traders focused on the latest earnings news amid another quiet day on the U.S. economic front.

Tech giant and Dow component IBM (IBM) came under pressure after reporting fourth quarter earnings that beat analyst estimates but on weaker than expected revenues.

IBM reported revenues that fell year-over-year due in part to a drop in demand from emerging markets such as China, although the company still forecast 2014 earnings above analyst estimates.

Shares of Advanced Micro Devices (AMD) also fell sharply after the chipmaker reported fourth quarter results that exceeded analyst estimates but forecast a drop in first quarter revenues.

Meanwhile, United Technologies (UTX) saw some strength on the day after reporting better than expected fourth quarter earnings. The diversified manufacturer also reaffirmed its 2014 guidance.

Voice and language technology company Nuance Communications (NUAN) moved sharply higher after raising its first quarter guidance.

Sector News

Despite the lackluster performance by the broader markets, airline stocks showed a substantial move to the upside on the day. The NYSE Arca Airline Index surged up by 2.3 percent to its best closing level in over eleven years.

Republic Airways (RJET) and JetBlue (JBLU) turned in two of the airline sector's best performances, advancing by 4 percent and 3.3 percent, respectively.

Natural gas stocks also saw considerable strength, driving the NYSE Arca Natural Gas Index up by 1.7 percent to a record closing high. The strength in the sector came as the price of natural gas jumped by nearly 6 percent.

Housing, semiconductor, and railroad stocks also saw notable strength on the day, with Norfolk Southern (NSC) leading the railroad sector higher after reporting better than expected fourth quarter results.

Meanwhile, gold stocks came under significant selling pressure, dragging the NYSE Arca Gold Bugs Index down by 2.8 percent. The weakness among gold stocks came amid a modest decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index edged up by 0.2 percent, while China's Shanghai Composite Index jumped by 2.2 percent.

Meanwhile, the major European markets ended the day roughly flat. While the French CAC 40 Index closed just above the unchanged line, U.K.'s FTSE 100 Index and the German DAX Index both edged down by 0.1 percent.

In the bond market, treasuries moved moderately lower after ending the previous session nearly unchanged. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 2.86 percent.

Looking Ahead

Following two relatively quiet days on the economic front, Thursday will see the release of reports on weekly jobless claims, existing home sales, and leading economic indicators.

Trading could also be impacted by the latest batch of earnings news, with eBay (EBAY), Netflix (NFLX), and Western Digital (WDC) releasing their quarterly results after the close of today's trading.

Additionally, McDonald's (MCD), Union Pacific (UNP), United Continental (UAL), and Lockheed Martin (LMT) are among the companies due to report their results before the start of trading on Thursday.

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