Stocks finished with mild losses Thursday after an earnings report from No. 1 retailer Wal-Mart (WMT) jarred investors. Drug and biotech stocks mustered strength to keep losses capped.
The Dow Jones industrial average dipped 10.89 points, or 0.11%, at 9,837.94. The broader Standard & Poor's 500 index fell 0.12 point, or 0.01%, to 1,058.41. The tech-heavy Nasdaq dipped 5.76 points, or 0.29%, at 1,967.35.
Losses on the Dow were led by Wal-Mart, Home Depot (HD) and Intel (INTC). Strength in Merck (MRK), Johnson & Johnson (JNJ) and Boeing (BA) helped keep index losses in check.
Wal-Mart's disappointing outlook gave the market pause. Wal-Mart reported a 14% rise in third-quarter profit, to 46 cents per share, driven by performance abroad and at Sam's Clubs. However, on lower gross margin, the world's largest retailer fell a penny short of Wall Street's earnings per share expectations. Its stock slid nearly 4%.
UBS analyst Gary Balter downgraded the stock to 'neutral' after the company's report. He fears the company "will not show the upside leverage other retailers have as the economy improves."
Says Standard & Poor's analyst Jason Asaeda in a research note: "With customers buying close to need and the company cautiously optimistic on the holiday season, we see gross margins under pressure in the near term." Asaeda kept a hold ranking on Wal-Mart shares.
On Friday, investors will have more earnings updates to mull. First, the market will look at results from Dell (DELL). So far, the company's "as expected" third-quarter earnings of 26 cents per share "failed to ignite a stampede of buyers," noted Paul Cherney, chief market analyst at Standard & Poor's.
Other consumer-focused companies are reporting earnings overnight. Starbucks (SBUX) said Thursday after the close that its profits for the fourth quarter rose 21% on strong sales of new drinks and its purchase card.
Kohl's (KSS), which reported a sharp drop in sales earlier in the month, reported net income of $121.2 million, or 35 cents per share, for the third quarter, down from $133.4 million, or 39 cents per share, a year ago.
Investors Friday will also get economic updates on October producer price index, industrial production, a preliminary read on November Universiy of Michigan consumer sentiment, and retail sales.
Economic research outfit MMS International expects the overall PPI to fall 0.1% in October, while the core index rises 0.1%. Vehicle sales may cause some surprise.
MMS expects industrial production to rise 0.4% in October. The sentiment index should improve to 91.0 from October's final reading of 89.6, says MMS.
Treasuries finished meaningfully higher after the successful conclusion to the quarterly refunding, capped by strong participation by "indirect bidders" in the 10-year note, says MMS International, an economic research group. Tomorrow's heavy slate of Fedspeak and likely muted October retail sales should not be an impediment to further gains.
On Thursday, an update on weekly jobless claims showed the number of people seeking initial jobless aid rose last week, but the figure still suggested some labor market improvement. Claims rose 13,000 to 366,000 in the week ended Nov. 8 from a revised 353,000 the prior week.
In other economic data, U.S. import prices rose 0.1% in October, vs. a fall of 0.4% in September, while export prices gained 0.3%, vs. a rise of 0.4%. Both price measures were below median forecasts and should take a back seat to the claims rebound and trade data.
European stock markets finished slightly higher Thursday, helped by strong earnings from Siemens. London's Financial Times-Stock Exchange 100 index added 1.8 points to 4,373.
In Paris, the CAC 40 gained 0.05 point, to 3,412.55. Germany's DAX index added 17.25 points, or 0.46%, to 3,765.59. Germany emerged from recession with a third-quarter GDP rise of 0.2% with help from increased exports and global economic strengthening.
Asian stock markets finished higher Thursday. Japan's Nikkei 225 index climbed 111.45 points, or 1.09%, to 10,337.45, with help from strong results at Applied Materials that lifted Japan's chips and other tech concerns. In Hong Kong, the Hang Seng index surged 256.09 points, or 2.14%, to finish at 12,227.57.