Dow Jumps for the Week on Robust Earnings

Published on Friday, 20 April 2012 18:11 Written by Christopher Lynn

New York, April 20^th (TradersHuddle.com) – Stocks closed mixed after paring earlier gains. The NASDAQ closed lower amid an ongoing correction on Apple shares, but the Dow and the S&P 500 closed in positive territory for the session and the week. The Dow propelled by robust earnings reports from its blue chip components.

The Dow Jones Industrial Average gained 65.16 points, or 0.50%. The S&P 500 index added 1.61 points or 0.12%, while the NASDAQ lost 7.11 points, or 0.24%.

For the week, the Dow jumped 1.40%, while the NASDAQ lost 0.36%, and the S&P 500 climbed 0.60%.

The market started on positive ground following positive earnings results from blue chips General Electric and Microsoft, which boosted investor confidence. Wall Street followed European markets higher after Asia closed mixed and, as German business sentiment was better than expected. Worries over Spain’s fiscal outlook and the uncertainty of France’s elections, continued, with investors keeping a wary eye on the euro zone.

Stocks were unable to establish a broad upside move, as financials and technology faltered, as the tug of war during the week continued amid some weak macro data and mostly positive earnings results, which in the view of some participants have been good but not good enough.

Financials, technology, energy, and materials closed in negative territory, while utilities, industrials, and consumer staples logged the biggest percentage gains. In the financial space, Bank of America (NYSE: BAC) broke down below its 50day moving average as shares tumbled 4.7% to $8.36. The stock logged the biggest percentage decline in the sector and in the Dow Jones Industrial Average. Analysts had mixed views after the company beat earnings expectations on the prior session on revenues that were inline with consensus.

Also, Morgan Stanley (NYSE: MS) saw weakness, with shares tumbling 3.27% to $17.48 as investors fretted over a possible credit rating downgrade from Moody’s. The stock had jumped in the prior session after the company beat on both the top and bottom lines. On the flip side in the sector, Travelers (NYSE: TRV) gained 1.7%, extending its gains from the prior session in which the insurer’s results topped expectations.

In the technology space, Apple (NASDAQ: AAPL) continued its correction, weighing on both the S&P 500 and the NASDAQ performance. The stock lost 2.46% to $572.98, as participants take profits ahead of next week’s earnings report on concern over a possible miss for iPhone shipments. Price action left the stock seeking support at its 50day moving average, currently trading at the $567 - $568 area. Yesterday, Cannacord Genuty raised its target price to $740 per share, but reduced its 2012 iPhone shipment forecast. Apple has lost 11% from its all-time high of $644 reached on April 10^th.

Also weighing on tech and the NASDAQ, SandDisk (NASDAQ: SNDK) plunged to the bottom of the S&P 500 as investors punished the stock after the company missed earnings expectations and said that 2012 revenues will be down from 2011. Altera (NASDAQ: ALTR) was among the worst performers, as well. The company missed earnings expectations and issued lackluster guidance, with Citigroup adding to the stock woes after it cut its rating to a Neutral from Buy. Altera tumbled more than 8% in the session.

Not all was negative in the sector, Microsoft (NASDAQ: MSFT) rallied to top the blue chip index, after the company topped earnings expectations. The stock jumped 4.55% to $32.42.

McDonald’s (NYSE: MCD) gained in the Dow, with shares climbing 0.7% to $95.94 as its quarterly results met expectations. The fast food chain said that global comparable sales grew 7.3% from the same year ago period, benefiting by extra sales from Leap day.

Also boosting the performance of the Dow and the industrial sector, General Electric (NYSE: GE) gained 1.15% to $19.36. The U.S. economy bellwether topped expectations on strong sales on its industrial segment and profit growth on GE Capital.

In the sector, Honeywell (NYSE: HON) jumped 2% after beating earnings expectations and as the company raised its full-year outlook, saying growth in U.S. and high-growth markets are more than offsetting softness in Europe.

Elsewhere, Schlumberger (NYSE: SLB) jumped 2.7% to $71.70 after the company beat earnings expectations thanks to strong deepwater drilling demand, while Riverbed Technologies (NASDAQ: RVBD) plunged 28.75% to $19.85 as investors sold position in the name after a series of downgrades which followed a revenue miss and a dismal quarterly outlook.