By Wallace Witkowski and Victor Reklaitis, MarketWatch
SAN FRANCISCO (MarketWatch) -- U.S. stocks returned to near
their highs of the day Tuesday following a sizable drop following
reports of fighting on the ground in Ukraine.
The Dow Jones Industrial Average (DJI), which had been down as
much as 100 points at midday, rose 76 points, or 0.5%, to 16,249 at
last check. The index reached an intraday low of 16,063.20.
The S&P 500 (SPX) rose 10 points, or 0.5%, to 1,841, with
energy and utilities faring best among the index's 10 sectors. It
had reached an intraday low of 1,816.24 earlier. The benchmark is
down 0.4% for the year.
The Nasdaq Composite (RIXF) entered positive territory after
being down most of the day. It was last up 9 points, or 0.3%, to
4,032. Earlier, the Nasdaq fell to an intraday low of 3,946.03,
about 12 points shy of being down 10% from its recent intraday high
on March 6. The Nasdaq is down 3.4% for the year.
Stocks rose early on upbeat earnings reports from Coca-Cola Co.
and Johnson & Johnson Inc. Their big tumble came following
reports that Russian forces had been spotted in the Ukraine and
that Ukrainian forces stormed an airport in Kramatorsk held by
pro-Russian militants. Ukrainian forces reportedly secured the
airport. The White House said pro-Russian militants are provoking
Ukrainian forces into a confrontation.
"In my view, the Russian headlines were the cause for the
decline," said Dan Greenhaus, chief global strategist at BTIG.
Equities started pulling back from earlier session highs after a
lower-than-anticipated reading for a gauge of home-builder
confidence. Also weighing on sentiment was an unexpected decline in
the Empire State manufacturing index.
Tuesday's big swings are pretty much in line with the volatility
stocks have seen over the past few weeks said Paul Nolte, portfolio
manager at Kingsview Asset Management.
"We've seen big swings and that's more a sign of investor
indecision about anything and everything," Nolte said. "We're still
trying to piece together what the investing landscape will be in
three months."
The market's choppy action and slight year-to-date loss isn't
surprising after 2013's big advance, said Jim Kee, president and
chief economist at South Texas Money Management. Kee said the firm
has been telling clients to expect one or more pullbacks or
corrections this year, but ultimately a gain by the end of the
year.
"It's kind of typical following a year like we had last year,"
he said of the market's slumps in 2014. Kee said the U.S. economy
is normalizing, and he remains bullish. "We've been telling our
clients that a pullback or a correction is a good time to put money
to work," he said.
Among chart watchers, some see further pain in at least the near
term for the S&P 500.
Jonathan Krinsky, chief market technician at MKM Partners, wrote
in a note Tuesday that he expects the benchmark to slip to its
200-day moving average, which is currently around the 1,763 level.
He's "looking for the SPX to test the 200 DMA in the next week or
so," he wrote.
Builder confidence in the market for newly built, single-family
homes edged up slightly in April to a reading of 47 from 46 in
March, but that missed forecasts for 50.
In other U.S. economic news, the New York Federal Reserve said
its Empire State manufacturing index slipped to 1.3 in April from
5.6 in March, missing forecasts for a gain to 8. In addition, the
Labor Department said U.S. consumer prices rose 0.2%, slightly
above what economists expected for that inflation gauge.
On the earnings front, Dow component Coca-Cola (KO) reported
growth in key emerging markets as first-quarter revenue beat
forecasts. Shares gained 3.8% to lead the Dow.
Johnson & Johnson (JNJ) advanced 1.8% after the Dow
component reported quarterly earnings that beat forecasts and
raised its full-year profit guidance. J&J was the second-best
performer in the blue-chip index.
Several Fed speakers were also on the docket. Fed Chairwoman
Janet Yellen said big banks may need more capital, while
Philadelphia Fed President Charles Plosser is moderating a panel
discussion that began at 3 p.m. Eastern at the Atlanta Fed
conference.
Meanwhile, Boston Fed President Eric Rosengren is scheduled to
speak at Husson University in Bangor, Maine, at 4 p.m. Eastern.
Rosengren is a leading dove on the Fed policy committee, but not a
voting member in 2014, and Minneapolis Fed President Narayana
Kocherlakota, a voting member, is speaking at a town hall in Fargo,
N.D., at 8 p.m. Eastern. Read: Spotlight on the economy
After the market's close, Intel Corp. (INTC) is forecast to post
first-quarter earnings of 37 cents a share, and Yahoo Inc. (YHOO)
is likely to report earnings of 37 cents a share in the first
quarter. Intel was last up 0.6%, while Yahoo rose 1.4%. Read
Commentary: Does anyone know what Yahoo wants to be?
"We expect Yahoo to report another muted quarter," analyst
Youssef Squali at Cantor Fitzgerald said in a note. "While 2013
represented a year of right-sizing, investment and acquisition, we
think 2014 should be the year where monetization efforts drive a
resumption in top-line growth, starting with first quarter
2014."
Among other notable movers on Tuesday, Citigroup Inc. (C)
advanced 1.2%, building on a gain from Monday, when the bank
reported first-quarter results above Wall Street forecasts.
Charles Schwab Corp.(SCHW) rose 2.9% after posting quarterly
profit that topped expectations before the open.
Shares of Motorola Solutions Inc. (MSI) dipped 0.6%, giving up
an earlier gain that came following the company's deal to sell its
enterprise business to Zebra Technologies Corp. (ZBRA) for $3.45
billion in cash. Zebra shares triggered a Nasdaq short-sale circuit
breaker after falling more than 10%.
The iShares Nasdaq Biotech ETF (IBB), which has been a poster
child for the recent tech-led selloff in U.S. stocks, was last up
0.8% in recent trade after being down for most of the day.
On Monday, stocks ended with broad gains, as an unexpectedly
strong rise in March retail sales and consensus-beating results
from Citi lifted the trading mood.
In other financial markets on Tuesday, bourses closed mixed in
Asia, with Hong Kong and Shanghai taking a hit from China's latest
credit data. European stocks lost ground as investors worried about
the Ukraine crisis. Oil (CLK4) and metals(GCM4) declined, pushed
lower by a stronger dollar.
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