U.S. Stocks Edge Higher
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By JONATHAN CHENG
U.S. blue-chip stocks edged higher as investors weighed a surprise earnings shortfall from Apple, mixed U.S. economic data and developments on the European debt crisis.
The Dow Jones Industrial Average added 33 points, or 0.3%, to 11610. The Standard & Poor's 500-stock index gained two points, or 0.2%, to 1227. But the Nasdaq Composite shed 13 points, or 0.5%, to 2645.
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Weighing on the markets were technology stocks, after Apple's fiscal fourth-quarter earnings and revenue fell short of expectations. Sales of iPhones also disappointed. Apple's outlook for the fiscal first quarter, however, was above Wall Street forecasts. The stock slumped 5% after finishing at an all-time high Tuesday.
Other tech names were weak too. Hewlett-Packard fell 2.1% and Cisco Systems slipped 1.4%.
Pulling on the upside were the four so-called defensive sectors that are less sensitive to the broader economy—health care, telecommunications, utilities and consumer staples. Financials were also strong, after Morgan Stanley and Travelers reported quarterly earnings.
On Tuesday, the Dow erased earlier losses to close up 180 points, reaching a six-week high in intraday trading. The Dow is now at the top of a "trading range" that has seen the blue-chip index bounce between about 10700 and 11700.
In economic news, consumer prices rose 0.3% in September, while underlying inflation, which excludes energy and food costs, rose by a tame 0.1%. The numbers were largely in line with expectations.
Separately, U.S. home building jumped 15% in September to its highest level in 17 months as apartment and condominium construction surged. But building permits, a gauge of future construction, fell 5.0% from a month earlier to the lowest level in five months.
"Core inflation is the main story, and it was soothing in that it doesn't raise any alarms—even the inflation superhawks don't have to worry," said Anthony Chan, chief economist for J.P. Morgan Private Wealth Management. He argued, however, that while the housing numbers looked positive at the headline level, the sector remained weak. "When you see building permits, which is really the pipeline measure for what happens to housing, it was pretty disappointing," he said.
Investors also continued to watch developments in Europe closely. In overseas markets, Europe was broadly higher. The Stoxx Europe 600 advanced 0.6% as continued optimism that an agreement will be reached to expand the euro zone's bailout fund overshadowed a two-notch downgrade of Spain's credit rating by Moody's Investors Service.
Asian markets also finished mostly higher. Hong Kong's Hang Seng Index rose 1.3% and Japan's Nikkei Stock Average added 0.4%.
"We're trying not to react to the daily rumor mill on Europe, but this big surge in the past two weeks has been wild," said Mark Masterson, partner and managing director for HighTower in Naples, Fla. Mr. Masterton said that expectations had now run up so quickly that the market could set itself up for disappointment.
"There could be a credibility problem here, particularly if Germany doesn't step up," he said. "The market is now going to be expecting a €2 trillion plan, because that's what's been bantered. Anything less may be greeted with a thud."
Gold futures edged higher to about $1,660 an ounce. Crude-oil futures were flat at just below $89 a barrel. The U.S. dollar lost ground against the euro and was flat against the yen. Demand for Treasurys fell, nudging the yield on the benchmark 10-year note higher to 2.1869%.
WSJ Money & Investing editor Francesco Guerrera sits down with Mean Street host Evan Newmark to discuss U.S. money market funds, usually a safe haven, posing a threat to investors. AP Photo.
The dollar is losing its safe-haven mantle as investors such as China worry about a lack of fiscal tightening and the risk of more monetary easing.
In other corporate headlines, Intel rallied 4.3% after the blue-chip semiconductor maker reported third-quarter results that exceeded estimates, and provided an upbeat fourth-quarter revenue outlook.
United Technologies edged up 0.3% after third-quarter results topped estimates, while Travelers gained 5.2% after beating revenue expectations.
Elsewhere, Yahoo climbed 5.3% after the Internet company's third-quarter earnings exceeded forecasts.
Morgan Stanley added 3.8% after swinging to a third-quarter profit.
Abbott Laboratories rallied 4% after the medical products company announced plans to separate into two publicly traded companies and reported better-than-expected third-quarter earnings.
Checkpoint Systems tumbled 26%. The retail systems-management company indicated its fiscal third-quarter and full-year results will fall short of expectations, and announced a restructuring plan that will affect more than 1,000 employees.
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