By Saumya Vaishampayan
U.S. stocks rose slightly Wednesday, a continuation of
back-and-forth action amid mixed first-quarter earnings.
The Dow Jones Industrial Average rose 48 points, or 0.3%, to
17998. The S&P 500 gained seven points, or 0.3%, to 2104, and
the Nasdaq Composite Index added nine points, or 0.2%, to 5023.
Stocks opened higher and then quickly turned lower, pushing the
Dow down 62 points at its low of the session. Stocks pared losses
by midmorning and moved higher, with the Dow gaining 62 points at
its high.
Recent action in the major indexes has been choppy, leaving
indexes trading in a range below all-time highs. The Dow is 1.6%
away from its record of 18288.63 and the S&P is trading 0.6%
below its closing high of 2117.39. The Nasdaq Composite is within
striking distance of its record of 5048.62 from March 2000.
Including results from 113 companies in the S&P 500,
earnings are on track to fall 3.9% from a year earlier, according
to FactSet. About 76% of those companies have beaten profit
expectations that were slashed heading into the reporting
season.
"We've really been in a trading range since earnings started,"
said Tom Wright, director of equities at JMP Securities. "For me,
one of the key factors is that on selloffs, we definitely see new
money coming to the market. We are encouraged by that," he
added.
On Wednesday, McDonald's Corp. reported a 2.6% drop in a key
revenue metric in the U.S. during its first quarter. The fast-food
giant posted a larger-than-expected decline in profit amid
foreign-currency impacts and restructuring charges. Shares rose
2.8% as total revenue was in line with Wall Street
expectations.
Coca-Cola Co. reported better-than-expected profit and revenue
in its first quarter, as beverage volumes inched up 1%. Shares
added 1.4%.
Boeing Co. said first-quarter profit rose 38%, but its revenue
growth didn't keep pace and costs tied to its flagship 787
Dreamliner program continued to mount. Shares fell 2.1%.
"I really don't feel like we're getting the growth in revenues
that makes me enthusiastic about earnings going forward," said
Carlton Neel, who manages about $1.4 billion as a senior managing
director and portfolio manager at Euclid Advisors LLC.
Many portfolio managers say that while valuations are elevated,
they aren't yet worrisome. The S&P 500 trades at 17.4 times the
previous 12 months' earnings, according to FactSet. That is above
the 10-year average of 14.6.
"The market is not cheap...but the reality is there's nowhere
else to go, " said Tom Digenan, who manages $6.5 billion as head of
U.S. equities at UBS Global Asset Management.
Mr. Digenan said he has become a little more aggressive looking
for opportunities in the energy sector. "We're trying to play the
names that are a little bit more sensitive to the price of oil," he
said. Mr. Digenan said that earlier this year, he bought stocks of
oil-services companies, which could benefit from a stabilization in
oil prices.
Energy stocks in the S&P rose 0.7% Wednesday, notching one
of the biggest sector gains.
In commodity markets, gold futures fell 1.2% to $1188.40 an
ounce. Crude-oil futures were nearly flat at $56.61 a barrel.
The yield on the 10-year Treasury note rose to 1.967% from
1.913% on Tuesday. Yields rise as prices fall.
Overseas stock action was mixed.
France's CAC 40 rose 0.4%, while Germany's DAX lost 0.6%.
Japanese stocks gained, pushing the Nikkei Stock Average to
close above 20000 for the first time since 2000.
In economic news, existing-home sales rose 6.1% in March from
February to an annual rate of 5.19 million, reaching the highest
level in 18 months. Economists surveyed by The Wall Street Journal
had expected March sales to rise to a rate of 5.03 million.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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