By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Hewlett-Packard skids 9% after earnings miss
NEW YORK (MarketWatch)--U.S. stocks ended Wednesday's choppy
session virtually unchanged. But the Dow Jones Industrial Average
eked out a small gain to close at a fresh record.
The blue-chip index (DJI) added 15.38 points, or 0.1%, to
18,224.57, scoring a record for the third time this year.
Federal Reserve Chairwoman Janet Yellen's second-day testimony
before Congress propped up markets up in early trade, but gains
faded out by the closing bell.
Yellen answered questions from members of Congress
(http://blogs.marketwatch.com/capitolreport/2015/02/25/live-blog-and-video-of-janet-yellens-second-day-of-testimony-before-congress/)
for the second day and continued to stress that normalization of
interest rates will begin when the Federal Open Market Committee is
confident that inflation is on track to hit the central bank's
inflation target of 2% growth.
A 2.6% drop in Apple Inc's shares helped contribute to the
marginal decline in the S&P 500 and Nasdaq Composite.
Also read: Apple shares may be ripe for a correction
(http://www.marketwatch.com/story/apple-ripe-for-a-correction-2015-02-24)
The S&P 500 (SPX) closed 1.6 points, or 0.1%, lower at
2,113.86, with half of its 10 main sectors ending lower. Consumer
discretionary stocks led the gains, utilities sold off the
most.
The Nasdaq Composite (RIXF) ended less than a point off at
4,967.14, breaking its 10-day winning streak.
Hewlett-Packard (HPQ) was also weighed on the tech index, with
shares falling 10%. The company said first-quarter revenue
(http://www.marketwatch.com/story/comcast-h-p-macys-first-solar-earnings-in-focus-2015-02-24)
fell short of Wall Street's expectations and it also cut its 2015
outlook to adjust for a stronger dollar.
Read more: What's changed since the last time the Nasdaq was at
5,000?
(http://www.marketwatch.com/story/six-differences-between-now-and-last-time-nasdaq-was-at-5000-2015-02-24)
(http://www.marketwatch.com/story/yellen-prepares-markets-for-less-patient-fed-2015-02-24)Bruce
Bittles, chief investment strategist at RW Baird & Co, said
Janet Yellen has provided more of the same regarding Fed
policy.
"There was nothing new and investors know that the Fed will not
want to lose its credibility by raising rates too soon, only to cut
them back again. We believe they will stay market-friendly for
longer," Bittles said.
Given the record moves in the S&P and Dow lately, Bittles
cautioned about overly bullish sentiment in the market, which is
usually associated with diminishing liquidity.
According to the latest American Association of Individual
Investors survey on market sentiment, stock market optimism levels
are at the highest since the start of this year, while pessimism is
at a three-month low.
Alan Gayle, senior investment strategist at RidgeWorth
Investments, said that the Fed isn't going to pull the rug from
under the markets.
"Yellen reminded everyone that the Fed has dual
mandate--unemployment and inflation. At current levels inflation
numbers are not where they should be," Gayle said.
Gayle said that his firm, which manages in aggregate some $46
billion, has shifted money from U.S. stocks into international
equities.
"European PMIs are ticking up and with the start of quantitative
easing from ECB, we see more growth in the equities there compared
with U.S. stocks," he added.
Retailers in focus:Chesapeake Energy Corp.(CHK) shares slid 9.6%
after a profit miss, making it the second-biggest decliner on the
S&P 500.
Late Tuesday, First Solar Inc.(FSLR) reported that its profit
nearly tripled in the fourth quarter. Shares, which climbed 10% on
Tuesday on deal news, were up more than 7%.
Read more: Target, Dollar Tree, Salesforce.com earnings in focus
(http://www.marketwatch.com/story/target-dollar-tree-salesforcecom-earnings-in-focus-2015-02-25)
Shares of Southwest Airlines Co.(LUV) fell 2.7% after the
company said it pulled 125 jets out of service Tuesday
(http://www.marketwatch.com/story/southwest-pulls-more-than-125-jets-out-of-service-over-missed-inspections-2015-02-25)--roughly
one-fifth of its fleet--over missed inspections.
Other markets: The view of a dovish Federal Reserve helped push
gold prices
(http://www.marketwatch.com/story/gold-retakes-1200-on-tailwinds-from-yellen-and-china-data-2015-02-25)(GCH5)
past $1,200 an ounce. The dollar
(http://www.marketwatch.com/story/dollar-pulls-back-versus-yen-after-yellen-testimony-2015-02-25)(DXY)
moved lower across major crosses, while WTI oil prices
(http://www.marketwatch.com/story/oil-futures-keep-a-wary-eye-out-for-us-inventory-data-2015-02-25)(CLJ5)
rose and settled at $50.99 a barrel on Wednesday, largely thanks to
the weakness in the U.S. dollar.
European stocks also pulled back, taking a breather from their
own record run on Tuesday. The Stoxx Europe 600 closed lower. Hong
Kong shares got a small lift
(http://www.marketwatch.com/storyno-meta-for-guid) after an initial
reading of China's manufacturing activity surprised to the
upside.
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