Stocks Lower on Weak Corporate Earnings
The stock market was mixed Thursday morning, held back by disappointing earnings from IBM and other major U.S. companies.
The weak corporate results offset the positive news that Congress raised the nation's borrowing limit late Wednesday to temporarily avert the United States from defaulting on its debt.
The Dow Jones industrial average was down 60 points, or 0.4 percent, to 15,313 as of 11:15 a.m. Eastern.
IBM was the biggest decliner on the Dow, falling $10.80, or 5.8 percent, to $176.00. The technology giant said Wednesday that its third-quarter net income rose 6 percent, but revenue fell and missed Wall Street's forecast by more than $1 billion.
Goldman Sachs also weighed down the index. The investment bank's revenue fell sharply as trading in bonds and other securities slowed. Goldman was down $4.07, or 3 percent, $158.10.
Broader major stock indexes were doing far better than the Dow, which has just 30 stocks. The Standard & Poor's 500 index was up less than a point to 1,722 and the Nasdaq composite was up a point as well to 3,841.
Now that there was no longer an immediate fear that the United States could default on its debt and the government was reopening, Wall Street was surveying the damage.
Market analysts expect 16-day partial shutdown of the government caused billions of dollars of damage to the U.S. economy through furloughed government employees, delayed government contracts, and declines in tourism at national parks. Analysts at Wells Fargo said the shutdown likely cut 0.5 percentage points off of U.S. economic growth.
Investors are still concerned that the two parties won't be able to reach a longer-term budget agreement. The deal approved late Wednesday only permits the Treasury Department to borrow through Feb. 7 and fund government through Jan. 15.
"The agreement represents another temporary fix that pushes fiscal uncertainty into the early months of next year," Wells Fargo analysts said.
Despite Thursday's modest declines and medium-term worries about the damage the debt ceiling and government shutdown did to the economy, there were signs that normalcy was returning to financial markets.
Stresses in the bond market were easing. The one-month Treasury bill was back to trading at a yield of 0.01 percent, about where it was a month ago, and down sharply from 0.35 percent on Tuesday.
Usually a staid, conservative security, the one-month T-bill was subjected to a wave of mass selling at the beginning of the month. Investors feared the T-bill would be the first piece of government debt to be affected by a U.S. default if the debt ceiling were breached and the federal government could no longer pay its obligations.
The yield on the more closely-watched 10-year Treasury note fell to 2.60 percent from 2.67 percent Wednesday.
In other corporate news:
- Dow member Verizon was up $1.86, or 4 percent, to $49.11. The telecommunications company said it earned an adjusted 77 cents per share for the recent quarter. Analysts polled by FactSet expected earnings of 74 cents per share.
- UnitedHealth Group was down $2.98, or 4 percent, to $72.22. The health insurance giant narrowed its 2013 profit forecast, instead of raising it, giving some analysts pause.
(Copyright 2013 by The Associated Press. All Rights Reserved.)