Dow pulls back as focus shifts to earnings, Spain
10.2.12- SAN FRANCISCO (MarketWatch) — Blue-chip stocks edged lower in choppy trading Tuesday, pressured by concerns ahead of quarterly earnings reports but finding some support from a report that Spain was prepared to seek a sovereign bailout from the euro zone.
Technology stocks, meanwhile, headed higher, with the Nasdaq Composite aiming to put an end to a two-session decline.
The “liquidity-infused high from QE3” is wearing off and investors are beginning “to worry that corporate earnings will not only be down, but be worse than expected,” said Keith Springer, president of Springer Financial Advisors in Sacramento, Calif.
The Dow Jones Industrial Average DJIA -0.57% slipped 9.71 points, or 0.1%, to 13,505.40, with 11 of its 30 components trading in negative territory.
The S&P 500 index SPX -0.25% climbed 3.27 points, up 0.2%, to 1,447.76. Health care was among the gainers, while materials were among the decliners.
With no major U.S. economic data on tap Tuesday, investors pondered news from the euro zone. Reuters, citing unnamed European officials, reported that Spain was prepared to seek a full bailout but that Germany was urging Madrid to hold off.
If Spain does request a bailout, that would start to remove some of the uncertainty surrounding the Iberian economy, since it would pave the way for the European Central Bank to buy Spanish bonds and hold down borrowing costs. See: Mark these euro-crisis dates.
Aside from euro-zone news, traders will keep an eye on quarterly financial reports and guidance as the earnings season kicks into full gear starting next week, with earnings from Alcoa Inc. AA -0.79% on Oct. 9. See the Tell blog: 10 stocks whose buybacks should boost EPS.
The Dow gained 0.6% on Monday after data showed activity in the U.S. manufacturing sector rose in September to its highest level in four months.
“Despite the better than expected ISM manufacturing survey yesterday, there remain some doubts about longer-term growth prospects for international stocks,” said Richard Hastings, a macro strategist at Global Hunter Securities. “We would not be surprised to see a few days like this scattered into the rally as traders get ready for Q3 results and for FY 2013 indicators.”
On Tuesday, advancers edged ahead of decliners on the New York Stock Exchange Monday, where 143 million shares traded. Composite volume neared 847 million.