By Alexandra Scaggs And Saumya Vaishampayan
U.S. stocks rose Thursday afternoon, as corporate earnings
reports supported consumer stocks but weighed down technology
shares.
The Dow Jones Industrial Average climbed 75 points, or 0.4%, to
17266.
The S&P 500 gained two points, or 0.1%, to 2004, while the
tech-heavy Nasdaq Composite fell five points, or 0.1%, to 4633.
The focus Thursday was on corporate earnings reports, traders
and strategists said. Steep moves in commodity and currency markets
have dented the fourth-quarter results of large international
firms, so investors are now trying to determine the outlook for
profits in 2015, strategists said.
"The question is how the stronger dollar impacts" earnings, said
Monica DiCenso, U.S. head of equity strategy at J.P. Morgan Private
Bank. "It certainly doesn't derail our view that you're going to
see another solid year of corporate earnings, and another year of
solid equity returns."
Going into the reporting season, analysts polled by FactSet had
expected earnings on the S&P 500 to rise 1.1% from a year
earlier, the slowest pace of growth since the third quarter of
2012. Including results at 176 companies on the S&P 500,
earnings are on track to rise 1.7% from a year ago. But without
Apple Inc.'s results, S&P 500 earnings would be on pace to
fall.
"Earnings for some of the bigger names have not been good," said
Darren Wolfberg, head of U.S. cash equity trading at BNP Paribas.
So now, investors "are trying to get back in line with proper
valuations for equities," he said, as the outlook for earnings
growth dims because of declining oil prices and a strengthening
dollar. So far this year, analysts have cut their 2015 earnings
forecasts by 3.8% for companies in the S&P 500, according to
FactSet.
Technology stocks fell, after a pair of tech firms reported
disappointing results. Qualcomm Inc. lost 12% after it cut its
forecast for its yearly profit, citing shifting market share among
smartphone makers. Alibaba Group Holding Ltd. fell 9.3%, after
reporting quarterly revenue that fell short of Wall Street's
forecasts.
"There does seem to be a skittishness in the market right now
and an unwillingness to tolerate misses," said Ms. DiCenso,
referring to worse-than-expected earnings reports. In some cases,
if the long-term outlooks at those companies haven't changed, it
could be a good opportunity to buy, she said.
The Dow outperformed other benchmarks, as component McDonald's
Corp. rallied 4.6%, contributing 26 points to the average's gain.
The fast-food chain said its chief executive, Don Thompson, was
leaving less than three years into his tenure. Steve Easterbrook,
currently chief global brand officer, will succeed Mr. Thompson on
March 1.
Consumer discretionary stocks in the S&P 500 gained 0.4%,
after the news from McDonald's and upbeat earnings reports from the
sector. Analysts and strategists say that retailers should benefit
from declining oil prices, as U.S. consumers spend less on
gasoline.
Coach Inc. rallied 6.4% after its quarterly earnings declined
less than expected, and highlighted a slight improvement in sales
at its North American locations.
Ford Motor Co. rose 1.9% after its profit exceeded expectations
and the company forecast stronger results for 2015.
Energy stocks had the biggest losses in the S&P 500 as oil
prices dropped further. Crude-oil prices fell 0.6% to $44.17 a
barrel, prompting a 0.6% energy-stock decline. Exxon Mobil Corp.
and Chevron Corp. were among the decliners in the Dow, losing 1.1%
and 0.9%, respectively.
Thursday's economic data was mixed. The Labor Department said
jobless claims fell by 43,000 to 265,000 in the week ended Jan. 24,
hitting the lowest level since April 2000. Economists polled by The
Wall Street Journal had expected 300,000 new claims.
But pending home sales made a surprise decline in December,
slipping 3.7% from the previous month. Economists surveyed by The
Wall Street Journal had forecast a 0.6% rise.
In other markets, gold futures fell 2.5% to $1253.30 an
ounce.
Treasury prices fell, pushing the yield on the 10-year Treasury
note up to 1.751% from 1.723% on Wednesday.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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