By Daniel Huang
U.S. stocks were mostly higher Wednesday, as continued strength
in corporate-earnings reports helped investors shrug off weakness
in European markets.
The Dow Jones Industrial Average rose 16 points, or 0.1%, to
16446. The S&P 500 index gained one point to 1921 and the
Nasdaq Composite Index advanced six points, or 0.1%, to 4358.
The gains were a contrast to a selloff in European stocks that
saw the Stoxx Europe 600 index close with a 0.9% decline.
While geopolitical tensions, particularly in Russia and Ukraine,
weigh on investor sentiment in Europe, U.S. investors have used a
strengthening U.S. economy as a reason to buy stocks. Also helping
boost appetite for stocks has been a relatively strong
second-quarter earnings season and low interest rates.
"Corporate earnings are continuing to come in strong," said Doug
Cote, chief market strategist at Voya Investment Management. "At
the end of the day, we are still in a bull market."
Shares of Molson Coors Brewing Co. rallied 6%, making the stock
the top gainer in the S&P 500. The company said its
second-quarter profit increased 8.8% as higher pricing helped boost
sales.
U.S. stocks slid on Tuesday, with the Dow industrials posting
their fourth loss in five sessions, amid heightened tensions
between Russia and Ukraine.
"Any time you get a geopolitical headline, it tends to dominate
trading for 24 hours," said J.J. Kinahan, chief strategist at TD
Ameritrade. "As soon as it blows over, you get back to what's
really driving the market."
On Wednesday, some investors were buying as they exited
positions made to protect against declines, known as hedges, said
Jeff Yu, head of single-stock derivatives trading at UBS AG. He
said that yesterday's dive was likely a result of investors making
those types of bets, since the steepest losses were in large-cap
stocks, which are typically easier to trade than small-cap stocks
and high-yield debt, which have both been under pressure
recently.
European markets fell. Data showed that Italy slipped back into
recession and German manufacturing orders surprisingly tanked in
June, deepening fears that the euro zone's economic recovery is
stalling. Germany's economy ministry said concerns about
geopolitics probably held back orders.
"There is a battle between traders focused on non-U.S. economic
pains and a positive U.S. economic narrative that is increasingly
compelling," said Peter Kenny, chief market strategist at Clearpool
Group.
Mr. Kenny pointed to strong earnings and signs of a robust U.S.
economy as fundamental factors propping up the market. The Commerce
Department reported Wednesday that the U.S. trade deficit narrowed
more than expected in June, likely boosting measures of
second-quarter economic growth.
"For U.S. investors investing in U.S. equities, the long list of
improving economic data is the more powerful theme," he said.
In corporate news, Sprint shares dropped 18%. The wireless
carrier decided Tuesday to abandon its pursuit of T-Mobile US Inc.
and replace its chief executive.
21st Century Fox withdrew its bid to buy Time Warner Inc.,
pushing shares up 4%. Time Warner shares fell 13%. Time Warner also
reported better-than-expected earnings in the second-quarter.
Walgreen Co. said it would buy the remaining 55% of
Switzerland-based Alliance Boots GmbH it doesn't already own and
confirmed it would maintain its U.S. headquarters after the merger
instead of pursuing a so-called tax inversion. Shares fell 14%.
Groupon Inc. shares declined 15% after posting a loss that
widened in the second quarter and issued disappointing guidance for
the current quarter, helping weigh on shares.
The yield on the 10-yaer Treasury note, which moves inversely
with its price, briefly dipped to an intraday low of 2.44%,
according to FactSet, matching the lowest yield so far this
year.
Gold futures rose 1.8% to $1,308.50 an ounce while crude-oil
futures fell 0.6% to $96.82.67 a barrel.
Write to Daniel Huang at daniel.huang3@wsj.com