By Alexandra Scaggs
U.S. stocks were mixed Wednesday afternoon, retreating from
session highs reached shortly after the Federal Reserve reiterated
it would be "patient" in raising interest rates.
Stocks got a brief boost from the Fed's statement, but it was
short-lived, as few investors had expected officials to signal a
coming rate hike. Technology shares continued to outperform, after
a strong earnings report from Apple Inc.
The Dow Jones Industrial Average was little changed, rising five
points, less than 0.1%, to 17392. The S&P 500 fell four points,
or 0.2%, to 2026, and the Nasdaq Composite Index climbed eight
points, or 0.2%, to 4690.
The central bank wasn't expected to make any changes in its
latest meeting, which wrapped up Wednesday. Investors have been
parsing recent statements from Fed officials for clues about when
they could raise interest rates, a move widely expected this
year.
Technology stocks gained, with the tech sector of the S&P
500 up 1.3%. Apple Inc. rallied 7% after "staggering" demand for
iPhones helped the company beat even the most bullish Wall Street
forecasts.
"Apple put up very strong numbers...[which is] good following a
day that was a relative bloodbath," said Brian Fenske, head of
sales trading at ITG.
But the sector didn't fully recover from its 3.3% drop on
Tuesday, when a disappointing earnings report from Microsoft Corp.
sent that stock down more than 9%. Microsoft shares fell an
additional 1.3% Tuesday.
Investors fret that a strengthening dollar and weak
international demand could damage some companies' bottom lines.
After Apple's report, stocks in the S&P 500 are on pace for
1.3% fourth-quarter earnings growth, according to FactSet, slightly
above analysts' projections of 1.1% at the start of reporting
season.
But without the tech giant's 38% profit growth, S&P 500
earnings are on pace for a yearly decline of 0.5%. Profits have
been weighed down by worse-than-expected bank results and the
impact of falling oil prices on energy companies.
"The excuse du jour for large caps missing estimates and giving
more cautious guidance is currency," said Alan Gayle, director of
asset allocation at RidgeWorth Investments, which manages more than
$45 billion.
But "fundamentally, the U.S. economy remains sound," he said, so
he expects their profit growth to pick up later this year.
Energy shares in the S&P 500 tumbled Tuesday, as crude-oil
futures resumed their monthslong decline. Fourth-quarter profits of
energy companies are expected to shrink by 25% from the previous
year, according to FactSet, as the oil-price dive weighs on their
bottom lines.
Among Dow components, Boeing Co. jumped after it posted
better-than-expected quarterly results. But the company gave a weak
outlook for profit in 2015, citing the possibility that the dive in
oil prices could damage demand for fuel-efficient planes.
AT&T Inc. rose after fourth-quarter earnings and sales
narrowly beat Wall Street's expectations. The telecommunications
company's results indicated some strain from higher competition
among carriers.
Adding to investors' jitters was a continuing slide in Greek
bonds and stocks, after last weekend's election of a new leftist
government. Investors fear that Syriza's victory could lead to
confrontation between Greece and its creditors. Stocks of other
indebted countries fell as well, with Spain's IBEX 35 down 1.3% and
Italy's FTSE MIB slipping 0.8%. Germany's DAX Index gained
0.8%.
In other markets, gold futures slipped 0.3% to $1289.60 an
ounce. Treasury prices rose, pushing the yield on the 10-year note
down to 1.753%.
In other earnings news, Yahoo Inc. gained after announcing it
would spin off tax-free its holdings in Alibaba Group Holding Ltd.
Its per-share earnings beat analyst forecasts.
Electronic Arts Inc. rallied after the videogame maker reported
strong results from the holiday-shopping season, exceeding Wall
Street's forecasts for its quarterly earnings and revenue.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com
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