Dell dents Dow as stocks end mixed
Wall Street ended today mixed, with an analyst’s upgrade of General Motors carrying the Dow Jones industrials to a fresh six-year high and within reach of its all-time best close.
But Dell’s profit warning put a dent in the tech sector.
The Dow pressed toward its all-time closing high although investors anxiously awaited the Federal Reserve’s next move on interest rates when policymakers meet tomorrow. Many on Wall Street are hoping the Fed will signal that an end to its rate tightening is near.
Ken Tower, chief market strategist for Schwab’s CyberTrader, said investors appeared increasingly optimistic about the market, especially after stocks held on to their sharp gains from the end of last week.
“People became much more bullish on Friday morning, and the fact they didn’t sober up over the weekend is a very positive sign for the market,” Tower said. “Of course, everything depends on the Fed. But at least for the moment, you have to look at the market in a positive light.”
Dell said its first-quarter sales and profit would miss prior estimates, hurt by discounting as it struggled to keep pace with competitors. Meanwhile, solid April sales at McDonald’s were helping the Dow’s advance and countering a rise in oil prices.
The Dow rose 55.23, or 0.48%, to 11,639.77. The index of 30 blue-chip stocks is about 80 points from its all-time closing high of 11,722.98, reached on January 14, 2000.
Broader stock indicators finished mixed. The Standard & Poor’s 500 index added 0.48, or 0.04%, to close at 1,325.14, and the Nasdaq composite index slid 6.74, or 0.29%, to 2,338.25.
Bonds drifted lower ahead of the Fed's meeting, with the yield on the 10-year Treasury note rising to 5.13% from 5.11% on Monday.
The dollar also weakened against the Japanese yen as the market worried about higher interest rates affecting the amount of credit flowing into the US economy. Meanwhile, gold prices soared to US$700 (€548.59) an ounce as investors looked to hedge their losses, said Peter Schiff, president of Euro Pacific Capital.
Crude futures marched forward amid persistent concerns about Iran’s nuclear arms program. A barrel of light crude added 92 cents to settle US$70.69 (€55.39) on the New York Mercantile Exchange, where gasoline rose 4.3 cents to US$2.047 (€1.60) a gallon.
Wall Street had little reaction to a lower-than-expected rise in wholesale inventories. The Commerce Department said inventories grew just 0.2% in March after swelling 0.9% the month before, below estimates of 0.5%.
Dell plunged 1.23 to 25.20 on its warning. The news also weighed on chipmaker Intel, which fell 21 cents to 19.90.
However, the tech sector had good news from Cisco Systems, whose 18% jump in revenue overshadowed a slight dip in earnings. Cisco lost 8 cents to 21.68 in regular trading before climbing 78 cents in after-hours activity.
Deutsche Bank lifted GM one notch to “hold”, citing recent moves to generate liquidity and progress with its restructuring. GM rose 2.25 to 25.80.
McDonald’s posted a 6.2% jump in global same-store sales, led by gains in Europe and the US. McDonald’s added 44 cents to 35.83.
Residential mortgage lender Fannie Mae said more errors have been uncovered in the government-ordered review of its accounting. Fannie Mae nonetheless rose 1.38 to 51.52.
Declining issues trailed advancers by 17 to 16 on the New York Stock Exchange, where volume of 1.53bn lagged the 1.56bn shares changing hands at the same point on Monday.
The Russell 2000 index of smaller companies fell 0.88, or 0.11%, to 780.72.
Elsewhere, Japan’s Nikkei stock average lost 0.58%. The FTSE 100 gained 0.63%, Germany’s DAX index rose 0.21% and France’s CAC-40 was higher by 0.56%.
