By Saumya Vaishampayan And Chris Dieterich
Most U.S. stocks advanced on Monday, though downbeat earnings
from International Business Machines Corp. weighed on the Dow
industrials.
The Dow Jones Industrial Average fell 23 points, or 0.2%, to
16349. All of the Dow's decline could be pinned to losses in just
one stock, IBM, which tumbled 6.8% to $169.68 after the company's
quarterly profit and revenue fell, missing expectations. The Dow is
a price-weighted average of its 30 components, meaning that pricier
stocks carry more sway in its up or down moves.
The S&P 500 added nine points, or 0.5%, to 1896, and the
Nasdaq Composite Index gained 32 points, or 0.8%, to 4291. The
Russell 2000 Index of small-company shares rose 0.7%, with the
recently hard-hit index extending last week's rebound.
Stocks swung wildly last week in heavy volume as investors
grappled with global growth worries and changing projections about
when the Federal Reserve might deem the U.S. economy strong enough
to begin raising interest rates. The Fed remains likely to end its
bond-buying program at its October policy meeting, The Wall Street
Journal reported, paving the way for an eventual rate increase.
The Dow industrials ended the tumultuous week Friday with a
decline of just 1%, a move that masked intraday slides of as many
460 points. The Nasdaq Composite briefly fell into a so-called
correction, meaning a decline of more than 10% from its Sept. 2
high. As the dust settled Monday, market watchers said both buyers
and sellers appeared reluctant to stake out big bets on moves in
either direction.
"People are trying to figure out whether there's a next leg down
here," said Michael Purves, head of equity derivatives research at
Weeden Co. "It's a little too early in earnings season to draw a
lot of conclusions about the broader economy."
In other corporate news, Apple rose 1.8% ahead of its quarterly
earnings report due out after the closing bell. Apple also rolled
out its digital payment system, Apple pay, to select retailers.
CSX Corp. fell 2.8% after Canadian Pacific Railway Ltd. said
that exploratory talks about a potential merger have been
terminated. Canadian Pacific dropped 0.4%.
Halliburton rose 0.6% after the company's board approved a 20%
increase to its quarterly dividend and the company reported a 16%
jump in revenue during the third quarter.
NCR Corp. fell 21% after maker of point-of-sale devices and
automated teller machines slashed its earnings guidance for the
year.
Even though the recent pullback has left the Dow down on the
year, the blue-chip index has gained 6.2% from a year ago. The
S&P has gained 8.7% from a year ago. Sam Stovall, U.S. equity
strategist at S&P Capital IQ, said the S&P is due for a
pullback of 10% or more, which would mean further declines in the
index. The S&P has fallen 6.2% from its Sept. 18 record close,
through Friday. Nevertheless, he said investors should view
additional declines as a chance to buy stocks rather than withdraw
money from the market.
"The average pullback, a decline of 5% to 10%, gets back to
break-even in only two months on average," Mr. Stovall said. "That
is very fast," he added.
European shares fell, with the Stoxx Europe 600 down 0.5%.
Business software provider SAP SE cut its earnings outlook for
2014, falling 5.3% in New York; Dutch technology company Royal
Philips NV fell 3.1% after swinging to a third-quarter loss
Japanese stocks rebounded with their biggest rally in 16 months,
as the Nikkei Stock Average rose 4%. On Friday, the Nikkei hit
correction territory from a late-September peak. Shares were buoyed
by news that a public pension fund in Japan is working on boosting
its allocation of Japanese stocks to around 25%.
Demand for U.S. government debt drove down the yield on 10-year
Treasury notes slightly to 2.196% from 2.198% on Friday. Yields
fall as prices rise.
In commodity markets, crude-oil futures fell 0.4% to $81.75 a
barrel. Gold futures rose 0.4% to 1244.40 an ounce.
Alexandra Scaggs contributed to this article.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com and
Chris Dieterich at chris.dieterich@wsj.com
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