Blue-chips recovered from session lows but still finished with losses on Monday after Dow component IBM (IBM) issued a warning that it would miss first quarter earnings estimates by a wide margin. Techs, meanwhile, managed to eke out a positive finish. And in energy, oil prices got a lift after Iraq said it would suspend oil exports for a month.
"Even though the Dow staged a 100-point recovery from this morning's low, there's still a negative pall on the market. Last week's jobless numbers, IBM's earnings warning and Iraq's oil threat are clearly making investors nervous," according to Stephen Carl, principal and head of U.S. equity trading at the Williams Capital Group.
According to S&P, Big Blue said it expects to report earnings per share of $0.66 to $0.70, vs. earlier estimates of $0.85 for the first quarter. Traders had begun to have doubts about the computer hardware and services giant's profit picture late last week. IBM noted particular problems in its OEM tech business. IBM stock shed more than $9 to end at just above $87 per share.
The Dow Jones industrial average -- including IBM -- closed down 22.56 points, or 0.22%, to 10,249.08. The Nasdaq Composite index was up 15.75 points, or 0.89%, to 1,785.78. And the broader Standard & Poor's 500 index, meanwhile, added 2.55 points, or 0.23%, to 1,125.11.
The day's top-performing sectors included energy, with the oil and gas drillers, exploration and production companies, and refiners gaining ground in the wake of the Iraqi supply cut. Underperforming sectors included computer hardware, IT consulting services, and computer storage peripherals.
Meanwhile, in merger news, Ameritrade Holding (AMTD), the nation's third largest online discount brokerage, agreed on Sunday to acquire a rival, Datek Online Holdings, for $1.29 billion in stock, the companies said.
Monday's rocky start comes as companies begin releasing their first quarter results. Among the highlights, on Tuesday biotech firm Genentech IBM (DNA) and drugmaker Abbott Laboratories IBM (ABT) are expected to report their earnings.
U.S. Treasuries ended lower in price, erasing much of last week's gains. There was little market reaction to news that U.S. wholesale inventories fell 0.7% in February after a downwardly revised 0.5% decline in January (from down 0.2% initially). Sales rose 0.8%, from a 1.2% rise in January. The inventory to sales ratio (I/S) dropped to 1.26 from a revised 1.27 (1.28 previously). Though inventories continue to decline, the pace is slowing, notes S&P MMS, and the eventual pick-up in production to restock shelves remains a strong element behind expectations for strong economic growth in the months to come.
European markets finished down. In London, the Financial Times-Stock Exchange 100 index shed 55 points, or 1.05%, to 5,178.60. Brent crude oil prices, meanwhile, were higher. In France, the CAC 40 was off 83.82 points, or 1.86%, to 4,431.88. In Germany, the DAX Index was lower by 74.96 points, or 1.47%, to 5,185.57.
In Asia, the markets ended mixed. The Nikkei managed to add 17.40 points, or 0.15%, to 11,6352.89, as new investment capital at the beginning of the new fiscal year flowed into market heavyweight telecom and bank shares. In Hong Kong, the market lost 107.69 points, or 0.99%, to 10723.68.