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S&P, Nasdaq climb but IBM results drag Dow lower

Tuesday, October 21, 2014 - 00:07
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US stocks were mixed on Monday, as the S&P 500 and Nasdaq advanced, but the Dow fell as quarterly results from IBM disappointed - PHOTO: BLOOMBERG

[NEW YORK] US stocks were mixed on Monday, as the S&P 500 and Nasdaq advanced, but the Dow fell as quarterly results from IBM disappointed.

IBM shares slumped 6.7 percent to US$169.84 as the biggest drag on both the Dow and S&P 500 after the company's third-quarter earnings fell well short of Wall Street expectations. IBM also said it would pay Globalfoundries US$1.5 billion in cash over the next three years to take its loss-making semiconductor unit.

IBM's weakness produced an outsized drop in the Dow Jones Industrial Average, accounting for about 80 points, nearly half, of the decline in the price-weighted index. In contrast, IBM curbed the gain on the market capitalization-weighted S&P 500 by about 7 percent.

"IBM is in a transition and will need to continue to be in transition to catch up. They are nonexistent in mobile and weak in the cloud and just paid somebody to take their semiconductor business, it's a company in transition," said Art Hogan, chief market strategist at Wunderlich Securities in New York. "We can look at earnings misses as they should be viewed, which is company specific."

At 11:40 a.m., the Dow Jones industrial average fell 44.83 points, or 0.27 percent, to 16,335.58, the S&P 500 gained 6.58 points, or 0.35 percent, to 1,893.34 and the Nasdaq Composite added 28.60 points, or 0.67 percent, to 4,287.04.

Earnings season will ramp up significantly this week, with nearly 130 S&P 500 companies scheduled to report, include Apple Inc, which was up 1.8 percent at US$99.43, after the close Monday.

According to Thomson Reuters data through Monday morning, of 87 companies in the S&P 500 that have reported quarterly earnings, 63.2 percent beat analyst expectations, roughly even with the 63 percent average since 1994 but below the 67 percent rate for the past four quarters.

Third-quarter earnings are expected to grow 6.7 percent from a year ago, on revenue growth of 3.6 percent.

The largest percentage gainer on the S&P 500 was Tesoro , which rose 6.4 percent, while the largest percentage decliner was IBM.

The largest percentage gainer on the Nasdaq 100 was Keurig Green Mountain, which rose 3.1 percent, while the largest percentage decliner was NetApp, down 2.3 percent.

Advancing issues outnumbered declining ones on the NYSE by 1,977 to 1,001, for a 1.98-to-1 ratio on the upside; on the Nasdaq, 1,682 issues rose and 848 fell for a 1.98-to-1 ratio favoring advancers.

The benchmark S&P 500 index was posting 2 new 52-week highs and 2 new lows; the Nasdaq Composite was recording 13 new highs and 24 new lows.

- REUTERS