Stocks Edge Down; Apple Not Enough to Turn Tide
NEW YORK (TheStreet) -- Stocks slipped Wednesday as the unresolved debt debate in Washington kept investors cautious despite gains in the financial sector.
The Dow Jones Industrial Average finished down 16 points, or 0.1%, to 12,572. The S&P 500 ticked less than a point lower to 1326, and the Nasdaq Composite shed 12 points, or 0.4%, to 2814.
On Tuesday, stocks rallied after reports that a bipartisan plan to cut $3.7 trillion from the deficit over 10 years was gaining support. Investors scaled back their expectations on Wednesday however, as the Aug. 2 deadline to raise the debt ceiling drew a day closer. Some analysts warned that the proposal had not been passed yet and would not necessarily prevent a potential downgrade in U.S. credit.
"The market is holding onto yesterday's gains," said Marc Pado, U.S. market strategist with Cantor Fitzgerald. "When you have such a big day yesterday, the fact that you're not giving all of that back is a positive."Early Wednesday, tech stocks were higher after Apple (AAPL) blew away Wall Street's quarterly earnings expectations by almost $2 per share after the close. Apple was most active within the tech sector with shares gaining 3%. Later in the day, however, a pullback in semiconductors and a decline in transportation stocks proved a drag on the overall market. Cantor Fitzgerald's Pado said Apple is seen as an industry in itself, limiting the benefit for the rest of the tech sector on its strong results.
Cramer: Apple Could Go to $500United Technologies (UTX), Microsoft (MSFT), Hewlett-Packard (HPQ) and IBM (IBM) were the Dow's biggest laggards. Hopes that French President Nicolas Sarkozy and German Chancellor Angela Merkel might present new options for Greece's debt problems after meeting in Brussels on Thursday gave a lift to financial stocks. Bank of America (BAC) and JPMorgan Chase (JPM) were among the Dow's best performers, alongside Boeing (BA), Cisco Systems (CSCO) and General Electric (GE). American Express (AXP)beat expectations with net income of $1.07 per share on revenue of $7.6 billion for the quarter. Analysts were expecting 98 cents per share on revenue of $7.35, according to FactSet. Shares traded down 0.5% to $51.66 after-hours. Market breadth was roughly split, with 60% of the 2.5 billion shares trading on the New York Stock Exchange rising and 40% declining. 1.4 billion shares changed hands on the Nasdaq. United Technologies (UTX) topped analysts' projections by 4 cents with second-quarter earnings of $1.45 a share and raised its forecast for the year. The stock, however, slipped 2.4% to $86.70. AMR Corp. (AMR), parent company of American Airlines, blamed higher fuel prices for a wider-than-expected second-quarter loss. The company also announced the largest aircraft order in history, saying it will order a total of 460 narrow-body jets from both Boeing (BA) and Airbus. AMR's stock lost 0.2% to $4.92 and Boeing's stock advanced 2.1% to $72.07. Shares of Yahoo! (YHOO) shed 7.6% to $13.48 after the Internet giant reported second-quarter earnings that topped analysts' expectations by a penny but revenue of $1.07 billion fell short of expectations for revenue of $1.12 billion. Riverbed Technologies (RVBD) saw its stock plunged 23% to $32.05 after the IT networking equipment company met expectations with a profit of 21 cents a share but missed revenue estimates. The company reported sales of $170.3 million, compared to the revenue of $172.9 million that analysts had projected. New economic data showing a continuing fall in home sales did not lend support for stocks. The National Association of Realtors said existing-home sales fell 0.8% in June to an annual rate of 4.77 million, from May's 4.81 million. Economists had been expecting an increase to 4.93 million, according to Briefing.com.
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