By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) -- U.S. equity investors began the week
on an optimistic, albeit cautious, note on Monday, with gains in
broader markets led by defensive sectors such as consumer staples
and utilities.
Monday's positive movement in the Dow industrial comes even as
one of its major components, IBM, posted disappointing quarterly
results, pushing shares of the tech giant lower and dragging down
the broader index.
The Dow Jones Industrial Average (DJI) closed 19.26 points, or
0.1%, higher at 16,399.67. The blue-chip index is down 1.1% since
the start of the year.
The S&P 500 (SPX) gained 17.25 points, or 0.9% to 1,904.01.
The benchmark index fell below its 200-day moving average last
Monday and still remains a few points below that key level.
The Nasdaq Composite (RIXF) rose 57.64 points, or 1.4%, to
4,316.07, led by gains in biotech and internet stocks.
After choppy trading periods in the early part of last week, the
major indices now have registered consecutive days of gains. That's
two straight positive trading days for the Dow industrials and
three for the S&P 500 and the Nasdaq.
IBM disappoints: IBM (IBM)'s earnings missed analysts'
expectations, and shares skidded 7.1%, making it the biggest
decliner among the Dow and the S&P 500 constituents.
IBM also said it will sell its global semiconductor technology
business to Globalfoundries, paying $1.5 billion in cash to the
company over the next three years and will reflect a precash tax
charge of $4.7 billion in its third-quarter results.
IBM's faltering stock also may deliver a $1-billion hit to
prominent investor Warren Buffett's Berkshire Hathaway (BRK/A),
which is the largest shareholder in the tech giant, with more than
70 million shares, according to FactSet.
Economic calendar: Dallas Fed President Richard Fisher said
Monday that he will support ending the central bank's bond-buying
program on schedule next week. In an interview on CNBC, Fisher said
he was not troubled by last week's market volatility and did not
think inflation was trending lower. Beginning Tuesday, Fed
officials observe an informal "black-out" and refrain from
discussion monetary policy for a week prior to their closed-door
deliberations.
More earnings: Shares of Hasbro Inc.(HAS) rose 4.9%, after
quarterly results came in better than expected.
Halliburton Co. (HAL) shares rose 1.3% after third-quarter
results were better than Wall Street had expected.
More than 1/3 of Dow stocks to report this week
Chipotle Mexican Grill Inc. (CMG) shares closed 1.8%, but fell
1.7% in extended-hours trading after releasing third-quarter
results.
Apple Inc. (AAPL) is projected to report fiscal fourth-quarter
earnings of $1.31 a share on sales of $40 billion, according to a
consensus survey by FactSet. What to watch for in Apple's results
Plus: More earnings expectations for Monday
Apple also starts rolling out its Apple Pay system on Monday,
though The Wall Street Journal points out the biggest gap is
department-store cards.
(Read more about the day's notable stocks in Movers &
Shakers column:
http://www.marketwatch.com/story/apple-ibm-chipotle-earnings-in-focus-2014-10-19.)
Other markets: German stocks led fresh weakness in Europe, with
the Stoxx Europe 600 index sinking nearly 1% after business
software maker SAP SE (SAP) lowered its earnings outlook for the
year. (Read more about Europe's big stock movers here:
http://www.marketwatch.com/story/sap-slides-nutreco-surges-europes-big-stock-movers-2014-10-20.)
In Asia, the Nikkei 225 index had a spectacular rebound, surging
nearly 4%, which weakened the yen (USDJPY) and drove investors into
the dollar. Gold(GCZ4) was 0.6% higher, while oil prices(CLX4)
inched lower.
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