By Dan Strumpf
U.S. stocks stalled Thursday after a stream of positive earnings
reports and initial public offerings failed to lift major
benchmarks for a third straight session.
The Dow Jones Industrial Average slipped 6.84 points, or less
than 0.1%, to 18105.77. The S&P 500 index lost 1.64 points, or
0.1%, to 2104.99. The Nasdaq Composite Index slipped 3.23 points,
or 0.1%, to 5007.79.
Stocks traded in a narrow range Thursday, following two straight
sessions of gains. Investors focused on a flurry of positive
earnings reports from some of the nation's biggest banks, which
helped buoy the financial sector. Financial companies in the
S&P 500 gained 0.1%.
Also drawing attention were several well-received IPOs. Crafts
marketplace Etsy Inc., party supplier Party City Holdco Inc. and
high-speed trading firm Virtu Financial Inc. made market debuts,
posting double-digit share gains.
But those factors failed to lift major benchmarks. Traders and
investors say they remain hesitant to continue boosting stocks
ahead of additional earnings reports in the weeks ahead. Market
watchers are expecting one of the most difficult earnings seasons
in years for the first quarter.
"With earnings season kicking off, people seem to be a little
more on edge than normal," said Justin Wiggs, managing director in
equity trading at Stifel Nicolaus. "People have cut their
[earnings] numbers so aggressively."
Shares of Citigroup Inc. rose 1.5% after the bank reported its
first-quarter profit jumped a bigger-than-expected 21%.
UnitedHealth Group Inc. shares gained 3.7% after the health
company lifted its full-year guidance due to a
stronger-than-expected 13% increase in first-quarter revenue.
Goldman Sachs Group Inc. said its first-quarter profit and
revenue rose, with results beating analysts' expectations. Still,
shares fell 0.4%.
Stocks have risen this month, advancing back toward all-time
highs, as a number of early earnings reports came in better than
expected. The Dow and S&P are each up nearly 2% so far in April
and are approaching records last seen in early March.
After hitting an all-time high on Wednesday, the Russell 2000
index of small-capitalization stocks pulled back 0.2%.
Losses in European markets had kept U.S. shares under pressure
Thursday, traders said. Germany's DAX fell 1.9% and France's CAC 40
lost 0.6%, as German government bonds hit record highs.
"There's still nervousness about Europe for sure," said Steve
Bombardiere, trader at Conifer Securities. "We have these days
where it just overtakes whatever the earnings news is."
Crude-oil futures gained 0.6% to $56.71 a barrel, rising for a
sixth straight session. The gains, however, failed to pull energy
stocks out of negative territory, with the S&P 500 Energy Index
losing 0.3%.
Money managers are bracing for a pullback in quarterly earnings
in the first quarter, as the slump in oil prices and the strong
dollar tripped up many companies. Analysts expect S&P 500
companies to report a 4.5% fall in first-quarter earnings,
according to FactSet.
"It's a market that is no longer cheap," said Stephen Freedman,
head of cross-asset strategy at UBS Wealth Management Americas.
"You need to have earnings growing at a reasonable pace for the
market to progress."
Mr. Freedman says he expects earnings to grow between 8% and 10%
for the full year, excluding energy companies. Against that
backdrop, he says broad market benchmarks can see high single-digit
returns this year.
"It's an earnings-driven market," he said.
SanDisk Corp. shares sank 4.5% after the chip maker said its
first-quarter profit plunged 86%, as revenue fell and the company
booked acquisition and restructuring-related charges.
Netflix Inc. said Wednesday it added 4.88 million subscribers in
the March quarter, which topped Netflix's own forecast for 4.05
million additions. Shares soared 18%.
In economic news, jobless claims rose 12,000 to 294,000 in the
week ended April 11, the Labor Department said. Economists had
expected 280,000 claims.
U.S. housing starts rose 2% in March from a month earlier to an
annual rate of 926,000, the Commerce Department said. Economists
surveyed by The Wall Street Journal had expected an annual rate of
1.04 million.
In other markets, gold futures lost 0.3% to $1198 an ounce. The
yield on the 10-year Treasury note fell to 1.878% as prices
rose.
Write to Dan Strumpf at daniel.strumpf@wsj.com
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