Allstate Journal

Mixed earnings reports cool Dow’s advance as stocks open lower

A cloudy earnings picture is weighing on the Dow and U.S. stocks in morning trading Tuesday on Wall Street. Traders are weighing the weak year-end profit guidance from Dow component IBM (IBM) last night with earnings beats before today’s opening bell from a trio of other Dow stocks, mobile phone player Verizon (VZ), insurer Travelers (TRV) and tech and aerospace firm United Technologies (UTX). Only Verizon topped revenue projections.New-York-Stock-Exchange

IBM shares were down 5.3% to $141.35. Given that the Dow Jones industrial average is a price-weighted index and IBM is one of its highest-priced stocks, Big Blue’s woes are weighing the Dow down. However, the earnings beats and higher stock prices from the three other Dow components are offsetting IBM’s negative drag. Verizon shares are up 1.5% to $45.39. United Technologies surged 5.8% to $97.43. And Travelers was up 2.3% to $108.77.

The Dow fell but was off its earlier lows and was trading down about 5 points, or less than 0.1%, in late morning trading as it bounced in and out of negative territory. The Standard & Poor’s 500 stock index was flat and the Nasdaq composite was down 0.3%. The Dow is riding a three-week winning streak and rose nearly 15 points Monday. Stocks have rebounded in recent weeks following the market’s first 10% price dip in four years. Traders have gotten more bullish following signals from the Federal Reserve that they might not hike interest rates until early next year. Low rates, of course, have been a big driver of stock gains in the bull market that began back in March 2009.

Many traders and money managers say the market is a tad “overbought” at the moment following a run higher of nearly 9% off the lows in late August. The broad market is also running into so-called “overhead resistance,” which makes gains harder to come by as the market runs up into a prior price ceiling, notes Patrick Adams, a money manager at Choice Investment Management.