Stocks dropped, paring gains from the biggest European rally since December, as Intel (INTC) Corp. and International Business Machines Corp. (IBM) disappointed investors with their quarterly results and bad loans surged in Spain. Treasuries rose, and oil fell.
The Standard & Poor’s 500 Index (SPX) slipped 0.4 percent to 1,385.14 at 4 p.m. New York time while the Dow Jones Industrial Average retreated 82.79 points to 13,032.75 as Intel lost 1.8 percent and IBM fell 3.5 percent. The S&P 500 trimmed its loss from 0.5 percent as consumer stocks rallied. The Stoxx Europe 600 Index declined 0.7 percent after adding 2 percent yesterday. Yields on 10-year Treasuries fell two basis points to 1.98 percent. Crude lost 1.5 percent.
Intel and IBM, two of the computer industry’s bellwethers, posted the slowest sales growth in years as a European slump weighed on orders last quarter. Better-than-estimated corporate earnings have helped fuel the S&P 500’s rally since March 2009. While profit growth will accelerate to 8.6 percent for all of 2012, income gained 1.7 percent during the first quarter, according to analyst estimates compiled by Bloomberg.
“We got used to companies beating estimates by a pretty good margin,” Burt White, who oversees $390 billion as chief investment officer at LPL Financial Corp. in Boston, said in a telephone interview. “While earnings estimates have come down, the whisper number hasn’t. Companies have a lofty target to beat. That’s why when you see results like Intel and IBM’s, it illustrates that the market does have higher expectations than what consensus is.”
Global stocks rose yesterday, giving the S&P 500 its biggest advance in a month, after higher forecasts from the International Monetary Fund and gains in Spanish bonds outweighed declines in U.S. housing starts and factory production. Yesterday’s 1.6 percent increase for the S&P 500 extended its 2012 rally to 11 percent as investors bought stocks amid better-than-estimated economic and corporate data.
Intel slid today as the world’s largest semiconductor maker forecast a second-quarter gross margin that was lower than some analysts predicted. IBM fell after the biggest computer-services provider had revenue that trailed estimates. Yahoo! Inc. (YHOO) gained 3.2 percent after reporting first-quarter sales that topped estimates.
Qualcomm Inc., among companies that report results today after U.S. exchanges close, slipped 0.4 percent.
Genworth Financial Inc. (GNW) sank 24 percent for the largest slump since August as the life insurer and mortgage guarantor postponed plans for a public offering of its Australian unit backing home loans after “elevated” losses in the nation.
Spanish bonds pared gains, pushing yields on 10-year debt to 5.82 percent from 5.72 percent earlier today. The nation’s non-performing loans as a proportion of total lending jumped to 8.16 percent in February, the highest level since 1994, from less than 1 percent in 2007, the Bank of Spain said today. The ratio rose from 7.91 percent in January as 3.8 billion euros ($5 billion) of loans soured.
The pound jumped 0.6 percent against the dollar after Bank of England policy makers said inflation may be higher than forecast. The yield on the 10-year gilt climbed four basis points to 2.13 percent. The two-year note yield rose as high as 0.49 percent, a level last seen on March 21.
The yen slid 0.5 percent against the dollar and declined 0.4 percent versus the euro. The Swedish krona strengthened against 15 of 16 major peers after the nation’s central bank kept its main rate unchanged amid signs the largest Nordic economy will avoid a recession.
Crude fell for the first time in three days, losing 1.5 percent to $102.67 a barrel, after the U.S. Energy Department said oil inventories rose 3.86 million barrels last week, more than double the increase forecast in a Bloomberg survey of analysts. Natural gas futures jumped 0.8 percent, rebounding from a 10-year low, ahead of a report on stockpiles tomorrow.
Gold futures dropped 0.7 percent, declining for the second time in three days, as the dollar’s advance curbed demand for the precious metal as an alternative asset.
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