By Anora Mahmudova and Carla Mozee, MarketWatch
Morgan Stanley disappoints; Delta and Halliburton top
estimates
NEW YORK (MarketWatch) -- The U.S. stock market erased early
gains on Tuesday, as a slide in oil prices hit energy
companies.
Investors weighed a flurry of mixed earnings results from the
likes of Morgan Stanley, Johnson & Johnson and Halliburton. But
the main focus was on the European Central Bank, which is expected
to announce its bond-buying program on Thursday.
The S&P 500 (SPX) was lower, with energy and consumer
discretionary sector stocks leading the losses. Nearly all ten main
sectors were trading lower.
The Dow Jones Industrial Average (DJI) edged lower with more
than half of its 30 components trading lower. Johnson & Johnson
was the top decliner among the blue chips, falling more than
2%.
The Nasdaq Composite (RIXF) also slid.
U.S. markets were closed on Monday in observance of the Martin
Luther King Jr. holiday.
"The big elephant in the room is deflation and many portfolio
managers are beginning to adjust their models to work in a low
interest rate environment. That adjustment period spells
volatility," said Marty Leclerc, chief investment officer of
Barrack Yard Advisors.
Leclerc stressed that in the short-term, current environment
will be favorable for stocks, as investors may justify higher
price-to-earnings ratios when the real interest rates is at
zero.
In economic news, a gauge of confidence among home builders
ticked down this month by one point to 57, staying close to the
highest level since late 2005, according to National Association of
Home Builders/Wells Fargo data released Tuesday morning. Readings
above 50 signal that builders, generally, are optimistic about
sales trends.
Homebuilder stocks were down sharply. PulteGoup Inc. (PHM), and
D.R. Horton Inc. (DHI) both fell more than 4%.
Stock futures had been climbing after better-than-expected
economic data from China, whose gross domestic product expanded
7.4% last year, beating market expectations of 7.2%. Still, that
marked the slowest rate of growth since 1990 for the world's
second-largest economy. Meanwhile, European equities were trading
around seven-year highs ahead of an expected unleashing of a
sovereign bond-buying plan by the European Central Bank when policy
makers meet on Thursday.
On Wall Street's agenda Tuesday were Morgan Stanley's quarterly
results (MS). The bank's shares fell after reporting fourth-quarter
results missed analyst expectations.
Delta Air Lines Inc. (DAL) shares jumped after the company beat
estimates,reporting fourth-quarter revenue of $8.24 billion, up
4.6%.
Halliburton Co. (HAL) shares fell after the company reported
better-than-expected results, but warned that 2015 could be a
challenging year for the oil-field servicing company, which is
planning to acquire Baker Hughes Inc. (BHI)
Consumer products heavyweight Johnson & Johnson (JNJ) beat
profit expectations, but sales fell shy of estimates. Shares fell
more than 3%.
Stocks to watch:SAP SE (SAP) dropped its midterm profit margin
forecast and reported a 1% decline in fourth-quarter profit, hurt
by its shift to cloud-based products.
Google Inc. (GOOG) is close to investing about $1 billion in
Space Exploration Technology Corp. to support its effort to deliver
Internet access via satellites, according to The Wall Street
Journal. Space X is backed by Tesla Motors Inc. (TSLA) chief Elon
Musk.
Twitter Inc.(TWTR) in a blog post Tuesday said it's buying
India-based mobile-marketing company ZipDial for an undisclosed
sum.
DreamWorks Animation SKG Inc.(DWA) last week started letting
workers go, The Wall Street Journal reported.
Other markets: Chinese stocks rose nearly 2% after Monday's
selloff and Japan's Nikkei Average closed 2.1% higher, its
strongest percentage gain in a month.
Gold futures (GCG5) were up more than 1%. Oil futures (CLH5)
fell nearly 5%, trading below $47 a barrel.
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