Dow Inches Higher As Earnings Season Picks Up
Wall Street ticked higher today as earnings season kicked into high gear and Federal Reserve Chairman Ben Bernanke gave the market some encouraging words. In choppy trading in a narrow range, the Dow Jones Industrial Average finished up 19 points, or 0.12%. With worries about the Fed taper continuing to circulate, Bernanke reminded Congress that there is no "preset course" to eliminate stimulus, helping to reassure investors that the central bank should act rationally and according to economic factors such as the unemployment rate's coming down when it rolls back the stimulus.
In other macro news, June housing starts and building permits came in slightly ahead of expectations, and the release of the Fed's Beige Book report, or its evaluation of the country's economy, showed it sees modest improvement nationwide, led by the recovering housing market.
None of those reports seemed to move markets, as earnings took center stage with four Dow components reporting today.
DuPont shares were flying higher, up 5.3%, though the chemical-maker didn't deliver earnings today. Word that Nelson Peltz's Trian Fund has taken a significant stake in the company caused shares to jump in late afternoon trading, according to CNBC. Peltz refused to confirm the rumors, and his fund didn't own DuPont as of its last filing in March. If true, the big buy would indicate a strong vote of confidence for DuPont, which recently lowered its guidance for the current quarter. The agricultural supplier will report earnings next Tuesday.
Bank of America also had a day to remember, gaining 2.8% to hit a new two-year high after reporting quarterly results this morning. Profits jumped 68% to $0.32 a share, better than estimates of $0.25 as litigation costs and expenses related to delinquent mortgages fell, and it increased its home lending 41%. Revenue improved 3% to $22.9 billion, also ahead of the experts' view. The results show a Bank of America that seems to have fully recovered from the morass of the financial crisis, as it continues to solidify its balance sheet.
Following in stride, IBM rose 2.5% in after-hours trading after reporting strong earnings despite a drop in revenue. Earnings per share rose to $3.91, ahead of the Street's consensus at $3.77, while revenue dipped 3% to $24.92 billion. Analysts had expected sales of $25.35 billion. Both service and hardware sales were down; however, software sales grew 4%. The tech giant also raised its EPS outlook to $16.90 from $16.70, and CFO Mark Loughridge said the company was poised to deliver earnings of $20 per share by 2015.
Finally, Intel wasn't so lucky, as the chipmaker sold off 3.5% following its earnings release after the bell.The declining PC market continued to weigh on the Pentium-maker, as did a sluggish economy in China, and the company posted a per-share profit of $0.39, in line with expectations, but down from $0.54 a year ago. Revenue of $12.8 billion missed estimates at $12.9 billion, and the company cut its full-year sales forecast to $53.3 billion, or flat growth, whereas before it had called for an increase in the low-single-digit increase.
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Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Intel and owns shares of Bank of America, Intel, and IBM. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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