By Saumya Vaishampayan
U.S. stocks rose Wednesday, with the Nasdaq Composite Index
trading within striking distance of its all-time high reached in
March 2000.
The Dow Jones Industrial Average rose 80 points, or 0.4%, to
18029 and the S&P 500 gained 11 points, or 0.5%, to 2108.
The Nasdaq Composite added 21 points, or 0.4%, to 5035. The
tech-heavy index is approaching its record of 5048.62 hit in March
2000.
Stocks opened higher Wednesday and then quickly turned lower,
pushing the Dow down 62 points at its low of the session. Stocks
pared losses by midmorning and pushed to session highs in afternoon
trading.
Recent action in the major indexes has been choppy, leaving
indexes trading in a range below all-time highs. The Dow is 1.4%
away from its record of 18288.63 and the S&P is trading 0.4%
below its closing high of 2117.39.
"We've really been in a trading range since earnings started,"
said Tom Wright, director of equities at JMP Securities. "For me,
one of the key factors is that on selloffs, we definitely see new
money coming to the market. We are encouraged by that," he
added.
Investors focused on corporate earnings Wednesday. Including
results from 113 companies in the S&P 500, earnings are on
track to fall 3.9% from a year earlier, according to FactSet. About
76% of those companies have beaten profit expectations that were
slashed heading into the reporting season.
Among individual stocks, McDonald's Corp. reported a 2.6% drop
in a key revenue metric in the U.S. during its first quarter. The
fast-food giant posted a larger-than-expected decline in profit
amid foreign-currency impacts and restructuring charges. Shares
rose 3.1% as total revenue was in line with Wall Street
expectations, adding 20 points to the Dow's gain.
Visa Inc. shares rose 4.1%, contributing 18 points to the Dow's
overall gain. On Wednesday, China unveiled rules that allow
domestic and foreign companies to set up bank card-clearing
operations, a move that is expected to offer Visa and MasterCard
Inc. a chance to expand in China. MasterCard shares rose 4%.
Coca-Cola Co. reported better-than-expected profit and revenue
in its first quarter, as beverage volumes inched up 1%. Shares
added 1.5%.
Boeing Co. said first-quarter profit rose 38%, but its revenue
growth didn't keep pace and costs tied to its flagship 787
Dreamliner program continued to mount. Shares fell 1.8%.
"I really don't feel like we're getting the growth in revenues
that makes me enthusiastic about earnings going forward," said
Carlton Neel, who manages about $1.4 billion as a senior managing
director and portfolio manager at Euclid Advisors LLC.
Many portfolio managers say that while valuations are elevated,
they aren't yet worrisome. The S&P 500 trades at 17.4 times the
previous 12 months' earnings, according to FactSet. That is above
the 10-year average of 14.6.
"The market is not cheap...but the reality is there's nowhere
else to go, " said Tom Digenan, who manages $6.5 billion as head of
U.S. equities at UBS Global Asset Management.
Mr. Digenan said he has become more aggressive in looking for
opportunities in the energy sector. "We're trying to play the names
that are a little bit more sensitive to the price of oil," he said.
Mr. Digenan said that earlier this year, he bought stocks of
oil-services companies, which could benefit from a stabilization in
oil prices.
Tech stocks rose 1%, leading the S&P 500 higher. Energy
stocks in the S&P rose 0.7% Wednesday, notching one of the
biggest sector gains.
In commodity markets, gold futures fell 1.4% to $1186.40 an
ounce. Crude-oil futures slipped 0.7% to $56.21 a barrel.
The yield on the 10-year Treasury note rose to 1.967% from
1.913% on Tuesday. Yields rise as prices fall.
Overseas stock action was mixed. France's CAC 40 rose 0.4%,
while Germany's DAX lost 0.6%. Japanese stocks gained, pushing the
Nikkei Stock Average to close above 20000 for the first time since
2000.
In economic news, U.S. existing-home sales rose 6.1% in March
from February to an annual rate of 5.19 million, reaching the
highest level in 18 months. Economists surveyed by The Wall Street
Journal had expected March sales to rise to a rate of 5.03
million.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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