A tech rally tipped off by solid results from software maker Oracle Corp. (ORCL) sputtered by the end of Tuesday's session, but the Nasdaq did manage to break a seven-session losing streak.
"We're still in a period of indigestion," says Alan Hoffman, senior portfolio manager with Value Line Asset Management. "In the afternoon investors started to say, 'who's next to disappoint?'" Hoffman says the stock market will not have a sustained uptick until there are "more definitive signs of better macro-economic conditions." He is looking for improved second quarter gross domestic product (GDP), better monthly employment figures and improved retail sales data, among other things.
After the market close Monday, Oracle reported fiscal fourth-quarter earnings per share of $0.15, a penny more than Wall Street's forecast of $0.14. But revenues for the quarter came in at $3.3 billion, $100 million short of analysts' estimates. Analysts took the company's results as solid, considering diminished expectations for information technology in general. But it is uncertain that a recovery in technology is near.
Healthy Oracle results gave tech stocks a boost today, but investors will likely continue to shift between bouts of optimism that the worst of earnings disappointments are over and worries that an economic rebound will take longer than expected. Analysts are expecting more confessions and continued pressure on the stock market.
Among today's other stocks to watch, Goldman Sachs Group Inc. (GS) posted a 24% decline in quarterly profits, but smaller rival Lehman Bros. Holdings Inc.'s (LEH) earnings far exceeded analysts' estimates on its bond business.
"Even though we got good news from Oracle, Lehman and Goldman, there's still a lot of uncertainty out there as people await the Fed's next move," says Stephen Carl, Principal and head of fixed income trading at Williams Capital Group LP. "Oracle is up around $2 today, but when things were better there would have been a $4 or $5 pop."
The Dow index was pressured from losses in Honeywell International (HON), whose merger with General Electric (GE) may not pass European scrutiny. General Electric's attempts to get clearance from European anti-trust regulators for its purchase of Honeywell are at an impasse. President Jeffrey Immelt said he sees no chance his company's $42 billion purchase will be approved there. Other aerospace-related companies on the Dow -- Boeing (BA) and United Technologies (UTX) -- also finished lower.
The technology-laced Nasdaq Composite ended higher by 4.04 points, or 0.20%, to 1,992.67. The Dow Jones Industrial Average finished off 48.71 points, or 0.46%, to 10,596.67. The broader S&P 500 index gained 4.15 points, or 0.34%, to 1,212.58.
U.S. Treasuries finished higher on weakness in equities, after trading lower most of the day.
In economic data, the Commerce Department said housing starts fell 0.4% in May, less than the1.2% expected by analysts. Building permits rose 2.1%. The continued strength in housing, which has been one of the outperforming areas of the struggling economy, could deter the Federal Reserve from lowering interest rates at its policy-setting meeting June 26 and 27. However, with inflation in check and ongoing weakness in other areas of the economy, most analysts expect a rate cut of at least 25 basis points at next week's meeting.
U.S. retail chain store sales rose 1.0% in the week ended June 16 after rising 0.3% the week before. This represents the strongest weekly gain since May 12, the week before Mother's Day. Sales were generally on to above plan for most retailers, according to Standard & Poor's economic research unit.
European markets finished higher on optimism from Oracle's report. In London, the Financial Times 100 ended higher by 8.80 points, or 0.16%, to 5,680.40. Germany's DAX Index closed up 53.49 points, or 0.91%, at 5,922.53. In France, the CAC 40 finished up 39.13 points, or 0.76%, to 5,199.41.
Asian equity markets ended mixed. In Japan, the Nikkei 225 Index ended down 123.53 points, or 0.97%, to finish at 12,574.26. Hong Kong's Hang Seng index added 184.88 points, or 1.43%, to 13,133.66. By Amy Tsao in New York