By Chris Dieterich And Saumya Vaishampayan
U.S. stocks advanced on Monday, though downbeat earnings from
International Business Machines Corp. kept a lid on gains for Dow
industrials.
The Dow Jones Industrial Average slipped seven points, or 0.1%,
to 16373. All of the Dow's decline could be pinned to losses in
just one stock, however: IBM. Its shares tumbled 7.2% to $168.97
after the company's quarterly profit and revenue fell, missing
expectations
The Dow is a price-weighted average of its 30 components,
meaning that pricier stocks carry more sway in its up or down
moves.
Other market benchmarks rallied. The S&P 500 gained 16
points, or 0.8%, to 1902, as each of the index's 10 sectors rose.
The Nasdaq Composite Index added 53 points, or 1.2%, to 4311. The
Russell 2000 Index of small-company shares rose 0.8%, with the
recently hard-hit index extending last week's rebound.
Stocks swung wildly last week in heavy volume as investors
grappled with global growth worries and changing projections about
when the Federal Reserve might deem the U.S. economy strong enough
to begin raising interest rates. The Dow ended Friday with its
fourth consecutive weekly decline, while the Nasdaq Composite
briefly fell into a so-called correction, meaning a decline of more
than 10% from its Sept. 2 high.
As the dust settled Monday, trading was quiet and gains were
broad. Many market watchers have been calling for stocks to lose
momentum after a nearly unhindered rise for most of this year.
Amid last week's turmoil, Keith Goddard, chief investment
officer at Capital Advisors, an independent investment manager that
oversees $1.5 billion in Tulsa, Okla., said he staked new stock
positions in Laboratory Corp. of America Holdings, among
others.
The steadily improving economy, rising profits and thirst for
dividend-paying stocks are factors likely to buoy the market in the
months ahead, he said.
"The ingredients are there for the markets to make their way
higher once we get past this latest string of concerns," Mr.
Goddard said.
In other corporate news, Apple rose 2% ahead of its quarterly
earnings report due out after the closing bell. Apple also rolled
out its digital payment system, Apple Pay, to select retailers.
CSX Corp. fell 1.5% after Canadian Pacific Railway Ltd. said
that exploratory talks about a potential merger have been
terminated. Canadian Pacific dropped 1.5%.
Halliburton rose 0.7% after the company's board approved a 20%
increase to its quarterly dividend and the company reported a 16%
jump in revenue during the third quarter.
NCR Corp. fell 22% after the maker of point-of-sale devices and
automated teller machines cut its earnings guidance for the
year.
Even though the recent pullback has left the Dow down on the
year, although the blue-chip index has gained 6.4% from a year
ago.
Sam Stovall, U.S. equity strategist at S&P Capital IQ, said
the S&P is due for a pullback of 10% or more, which would mean
further declines in the index. The S&P has fallen 6.2% from its
Sept. 18 record close, through Friday. Nevertheless, he said,
investors should view additional declines as a chance to buy stocks
rather than withdraw money from the market.
"The average pullback, a decline of 5% to 10%, gets back to
break-even in only two months on average," Mr. Stovall said. "That
is very fast," he added.
European shares fell, with the Stoxx Europe 600 down 0.5%.
Business software provider SAP SE cut its earnings outlook for
2014, falling 4.9% in New York; Dutch technology company Royal
Philips NV fell 2.5% after swinging to a third-quarter loss
Japanese stocks rebounded with their biggest rally in 16 months,
as the Nikkei Stock Average rose 4%. On Friday, the Nikkei hit
correction territory from a late-September peak. Shares were buoyed
by news that a public pension fund in Japan is working on boosting
its allocation of Japanese stocks to around 25%.
Demand for U.S. government debt drove the yield on 10-year
Treasury notes down slightly to 2.180% from 2.198% on Friday.
Yields fall as prices rise.
In commodity markets, crude-oil futures inched lower by less
than 0.1% to settle at $82.71 a barrel. Gold futures rose 0.5% to
settle at 1244.00 an ounce.
Write to Chris Dieterich at chris.dieterich@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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