Stocks end in mixed territory
U.S. stocks closed the day in mixed territory Wednesday, after investors sorted through a divergent batch of earnings reports, including solid results from Boeing, and a big miss from Apple.
The Dow Jones industrial average closed 59 points higher, or 0.5% snapping three days of losses. AT&T and Boeing led the way. The airplane maker topped earnings forecasts and boosted its guidance for the year.
Caterpillar was initially the best performer on the Dow, as investors cheered the manufacturing giant's earnings beat and rosy outlook. The stock slid somewhat after an executive said that the construction industry in China remains weak and has yet to show improvement.
The S&P 500 closed just below the breakeven line. Positive results from chipmakers Altera and Broadcom were offset by bad numbers from TripAdvisor.
The Nasdaq fell 9 points, or 0.3%, due largely to Apple's earnings miss. Apple is the biggest component of the tech-heavy index by far, and shares closed down more than 4%.
Aside from earnings, investors were disappointed after a report showed that new home sales fell 8.4% in June from the two-year high reached in May.
Meanwhile, Europe continues to be a worry for investors. Spain's borrowing costs are skyrocketing, business confidence in Germany is weakening, and Greece's creditors are taking stock of that nation's progress.
Fears that Spain is moving closer to needing a full-blown bailout -- like those granted to Greece, Ireland and Portugal -- continued to build, with Spain's 10-year yield hitting a new record high of 7.751%.
Also adding to the nervousness, Germany's business confidence index declined for a third straight month in July, hitting the lowest level in more than two years amid Europe's escalating debt crisis.
Treasury Secretary Tim Geithner, testifying before the House Financial Services Committee Wednesday morning, also said that Europe is the biggest threat to the U.S. economy.
World markets: European stocks ended mixed. Britain's FTSE 100 fell slightly, the DAX in Germany added 0.3% and France's CAC 40 rose 0.2%.
The shares got a brief lift thanks to comments by European Central Bank policymaker Ewald Nowotny, who said it may be justified to take steps that would boost the firepower of the eurozone's new bailout fund.
Nowotny said that there are some arguments in favor of granting the European Stability Mechanism (ESM) a banking license that would allow it to borrow unlimited money from the ECB.
However, the relief was temporary since the comments appeared to be "off the cuff and purely a personal opinion, with Nowotny admitting that the issue is not even under discussion at the ECB," said Grant Lewis, head of research at Daiwa Capital Markets in London.
"Such a move remains highly improbable," Lewis added. "Both the German government and the ECB remain implacably opposed to this, arguing that it would be akin to direct central bank deficit financing, something explicitly ruled out by the European Union treaties."
Asian markets ended in the red. The Shanghai Composite lost 0.5%, the Hang Seng in Hong Kong slipped 0.1% and Japan's Nikkei dropped 1.4%.
Companies: Ford's second-quarter profit dropped 57% to $1 billion, hurt by a loss in the company's European operations. Shares of Ford were trading lower.
PepsiCo shares rose after it reported better-than-expected earnings before the opening bell. But, like many global companies, its revenue was hurt by unfavorable currency exchange rates.
Nasdaq, which has been in the spotlight since Facebook's botched market debut in May, also reported results. The exchange operator's revenue and profit rose slightly during the quarter and topped expectations. Shares were higher.
Shares of AOL surged after the company reported advertising growth in its quarterly results.
Shares of Visa moved up in after hours trading after the credit card company beat profit forecasts when it reported earnings after the bell.
Zynga's stock dropped more than 35% in after hours trading after the online gaming company missed earnings expectations.
Shares of Symantec jumped after the security software company ousted CEO Enrique Salem, and named chairman Steve Bennett as his replacement.
Currencies and commodities: The dollar fell against the euro, but gained ground versus the British pound and Japanese yen.
Oil for September delivery rose 50 cents to $89.00 a barrel.
Gold futures for August delivery rose $27.40 to $1,603.60 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 1.41% from 1.40% late Tuesday.
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