By Alexandra Scaggs
U.S. stocks edged lower in afternoon trading Wednesday as
investors digested mixed earnings reports.
The Dow Jones Industrial Average shed 20 points, or 0.1%, to
16494 in afternoon trading. The S&P 500 index slipped four
points, or 0.2%, to 1876 and the Nasdaq Composite Index dropped 32
points, or 0.8%, to 4129.
Stocks paused from a recent march higher, which had brought
major indexes within 1% of their record closing highs as of
Tuesday's close. The S&P 500 rose for six consecutive sessions,
to close Tuesday 0.6% below its April 2 record, and the Dow rose in
five of those sessions, to close Tuesday 0.4% shy of its all-time
high from Dec. 31.
"We've been up six days in a row, so there is a natural tendency
for people to take some profits," said J.J. Kinahan, chief
strategist at T.D. Ameritrade.
Weighing on shares was a disappointing report on the housing
market. New-home sales for March declined 14.5% to a seasonally
adjusted annual rate of 384,000, while a rise of 2.3% to a rate of
450,000 was expected. The iShares U.S. Home Construction
exchange-traded fund, which tracks home builders such as Lennar and
PulteGroup, fell 1.7%.
Investors have been keeping a close eye on recent economic
reports, after a string of disappointing data at the beginning of
the year, amid an unusually icy winter. They are looking for growth
to rebound as the weather warms up.
"If it was all weather, it all should come back strongly," said
Jurrien Timmer, director of global macro strategy and portfolio
manager with Fidelity Investments. "If it only comes back halfway,
maybe it is something else...and earnings growth likely won't
accelerate." In that case, he said, U.S. stock indexes would likely
see single-digit total returns over the full year.
U.S. stocks have been bolstered in recent sessions by corporate
news and economic data that indicated improvement. The S&P 500
is up 0.6% so far this week. Companies in the index are on track to
report that first-quarter profits declined 0.6% from last year,
according to FactSet, but investors say they attribute much of that
weakness to the weather.
Earnings reports from Dow components were mixed on Wednesday.
Boeing rose 2.1% after beating first-quarter adjusted earnings and
revenue estimates and raising its full-year core earnings
outlook.
AT&T fell 3.4% after earnings fell from year-ago levels but
slightly topped estimates. The stock closed Tuesday at a 5
1/2-month high.
Procter & Gamble declined 0.4% after the consumer-products
giant beat fiscal-third-quarter earnings forecasts, but cut its
full-year outlook.
Some high-profile technology companies including Apple and
Facebook are due to report results after the close. Shares of Apple
slipped 0.9% and those of Facebook lost 2.2%.
The yield on the 10-year Treasury note slipped to 2.686% from
2.726% late Tuesday.
Crude-oil futures slipped 0.3% to $101.42 a barrel, after
suffering the biggest decline since Jan. 2 on Tuesday amid supply
concerns.
Gold futures rose 0.2% to $1,284.20 a troy ounce. The dollar
lost some ground against the euro and the yen.
European markets pulled back after data showing the economic
recovery in the euro zone is gathering momentum weakened hopes for
further easing measures from the European Central Bank. The Stoxx
Europe 600 fell 0.6%.
Asian markets were mixed. The Shanghai Composite fell 0.4% after
data showing China's manufacturing sector improved slightly in
March, but still pointed to a fourth straight month of contraction.
Japan's Nikkei Stock Average rallied 1.1%.
In other corporate news, Gilead Sciences, a biotechnology firm
that has been hit by volatile trading in recent weeks, climbed 2.2%
after reporting late Tuesday earnings and revenue that were well
above analyst estimates.
Plug Power slumped 3.9% after the fuel-cell technology company
said late Tuesday it was planning a public share offering, its
third equity offering this year.
Illumina rose 4.8% after the biotechnology company reported late
Tuesday better-than-expected first-quarter earnings and provided a
second-quarter outlook that was above current projections.
Biogen Idec, another biotech firm that has rebounded in recent
sessions, slipped 1.4% after missing Wall Street projections for
adjusted first-quarter earnings per share, though it raised its
full-year outlook.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com