By Alexandra Scaggs And Saumya Vaishampayan
U.S. stock indexes were mixed Thursday, as the continuing drop
in crude-oil prices continued to weigh on energy shares.
The Dow Jones Industrial Average rose 49 points, or 0.3%, to
17240.
The S&P 500 declined one point, or 0.1%, to 2001, and the
Nasdaq Composite fell eight points, or 0.2%, to 4630.
Energy stocks had the biggest losses in the S&P 500 as oil
prices dropped further. Crude-oil prices fell 1.1% to $43.94 a
barrel, prompting a 0.9% energy-stock decline. Exxon Mobil Corp.
and Chevron Corp. were among the decliners in the Dow, losing 1.5%
and 0.9%, respectively.
Still, the Dow outperformed other benchmarks, as component
McDonald's Corp. rallied 4.3%, contributing 24 points to the
average's gain. The fast-food chain said its chief executive, Don
Thompson, was leaving less than three years into his tenure but
gave no reason for his departure. Steve Easterbrook, currently
chief global brand officer, will succeed Mr. Thompson on March
1.
But the main focus Thursday was corporate earnings reports,
traders and strategists said. Steep moves in commodity and currency
markets have dented the fourth-quarter results of large
international firms, so investors are now trying to determine the
outlook for profits in 2015, strategists say.
"The question is how the stronger dollar impacts" earnings, said
Monica DiCenso, U.S. head of equity strategy at J.P. Morgan Private
Bank. "It certainly doesn't derail our view that you're going to
see another solid year of corporate earnings, and another year of
solid equity returns."
Going into the reporting season, analysts polled by FactSet had
expected earnings on the S&P 500 to rise 1.1% from a year
earlier, the slowest pace of growth since the third quarter of
2012. Including results at 176 companies on the S&P 500,
earnings are on track to rise 1.7% from a year ago. But without
Apple Inc.'s results, S&P 500 earnings would be on pace to
fall.
"Earnings for some of the bigger names have not been good," said
Darren Wolfberg, head of U.S. cash equity trading at BNP Paribas.
So now, investors "are trying to get back in line with proper
valuations for equities," he said, as the outlook for earnings
growth dims because of declining oil prices and a strengthening
dollar. So far this year, analysts have cut their 2015 earnings
forecasts by 3.8% for companies in the S&P 500.
Coach Inc. rallied 6.1% after its quarterly earnings declined
less than expected, and highlighted a slight improvement in sales
at its North American locations.
Alibaba Group Holding Ltd. fell 10%, after it said revenue fell
short of expectations in its latest quarter.
Ford Motor Co.'s pretax profit exceeded expectations and the
company forecast stronger results for 2015. Shares edged up
0.1%.
"There does seem to be a skittishness in the market right now
and an unwillingness to tolerate misses," said Ms. DiCenso,
referring to worse-than-expected earnings reports. In some cases,
if the long-term outlooks at those companies haven't changed, it
could be a good opportunity to buy, she said.
Thursday's economic data was mixed as well. The Labor Department
said jobless claims fell by 43,000 to 265,000 in the week ended
Jan. 24, hitting the lowest level since April 2000. Economists
polled by The Wall Street Journal had expected 300,000 new
claims.
But pending home sales made a surprise decline in December,
slipping 3.7% from the previous month. Economists surveyed by The
Wall Street Journal had forecast a 0.6% rise.
In other markets, gold futures fell 2% to $1260.70 an ounce.
Treasury prices fell, pushing the yield on the 10-year Treasury
note up to 1.754% from 1.723% on Wednesday.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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