By Saumya Vaishampayan
The Dow industrials turned little changed amid mixed corporate
earnings from UnitedHealth Group Inc. and International Business
Machines Corp.
The Dow Jones Industrial Average rose five points to 17520. The
Dow has traded in an intraday range of about 204 points.
Other indexes were slightly higher. The S&P 500 added five
points, or 0.3%, to 2028 and the Nasdaq Composite Index gained
seven points, or 0.2%, to 4662.
Earlier, stocks gained after reports suggested the European
Central Bank was set to deliver a bond-buying program that matched
investors' expectations.
A proposal from the ECB's executive board calls for bond
purchases of about EUR50 billion ($58 billion) a month that would
last for a minimum of one year, The Wall Street Journal reported.
The proposal suggests bond purchases could amount to at least
EUR600 billion, in line with forecasts that have recently centered
on a figure of around EUR500 billion or higher.
Wednesday's swing in stocks is in line with recent market
action. Volatility has picked up across asset classes, with the
CBOE Volatility Index trading near its 10-year average of 20. The
VIX's average for 2014 was just 14.2.
"We get all worked up about a 100-point move in the Dow these
days because in the last five years we've had a calm, complacent
market," said Viren Chandrasoma, managing director of equity
trading at Credit Suisse Group AG. "In the last few months, you've
seen not crazy volatility but more of a return to normal," he
added.
Earnings continued to attract attention. IBM reported further
declines in quarterly profit and revenue, and issued a profit
forecast that fell below Wall Street's expectations. Shares fell
3%, down the most on the Dow.
UnitedHealth Group Inc. said earnings rose 5.8% in its December
quarter, beating expectations. Shares gained 2.6%, up the most on
the Dow.
Netflix shares surged 18%.
The company said it added 4.3 million streaming customers as
foreign markets grew faster than expected, beating its forecast of
4 million.
Going into the fourth-quarter earnings season, analysts surveyed
by FactSet had expected earnings growth of 1.1%, the weakest since
the third quarter of 2012. U.S. companies faced dollar strength, a
sharp drop in oil prices and weak economic growth abroad during the
quarter. Early indications don't look rosy: factoring in 51
companies that have already reported, the S&P 500 is on track
to post earnings growth of just 0.36% from a year ago.
"Oil is probably the biggest story," said Bill Stone, chief
investment strategist at PNC Wealth Management. "I know that energy
earnings are going to be bad. The other side is, do any of the good
[effects] of lower oil start showing up?" Mr. Stone noted that
Delta Air Lines Inc.'s better-than-expected fourth-quarter results
were helped in part by savings on jet fuel.
European stocks closed sharply higher, with Germany's Dax 30
near its all-time high. The Stoxx Europe 600 rose 0.6%, a fresh
seven-year high.
Demand for haven assets ebbed. Gold futures lost 0.1% to
$1292.60 an ounce. The yield on the 10-year Treasury note rose to
1.858% from 1.806% on Tuesday. Yields rise as prices fall.
In economic news, housing starts climbed 4.4% in December from a
month earlier to an annual rate of 1.089 million, the Commerce
Department said Wednesday. Building permits, an early indicator of
construction activity, fell 1.9% to an annual rate of 1.032
million. Economists surveyed by The Wall Street Journal had
expected overall housing starts to reach a pace of 1.04 million in
December and building permits to hit a rate of 1.06 million. The
housing-starts report tends to be volatile and is often
revised.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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