Stocks turned mixed early Tuesday as investors digested the latest round of corporate earnings.
The Dow Jones industrial average reversed earlier gains and headed lower, dragged down by Johnson & Johnson, Travelers and Verizon. The S&P 500 and the Nasdaq held on to modest gains. U.S. markets were closed Monday for Martin Luther King, Jr. Day.
BlackBerry shares jumped in early trading amid ongoing hopes the smartphone maker’s new CEO John Chen will turn the company around. After last year’s drubbing, BlackBerry is the best performing stock in CNNMoney’s Tech30 Index so far in 2014. The Tech 30 was higher Tuesday, largely due to BlackBerry’s big pop.
Stocks have been off to a rocky start in 2014. After last year’s spectacular rally, investors are looking for signs the economy will be strong enough to keep the rally going. But with little economic data on the agenda this week, investors are turning their attention to the latest quarterly reports from big U.S. corporations.
“So far earnings results have been overall supportive of stock prices even as the market has come under some degree of pressure after a spectacular performance in the year just ended,” said John Stoltzfus, chief investment strategist at Oppenheimer.
Johnson & Johnson reported quarterly results that topped expectations, but shares fell on the company’s cautious outlook for 2014. Earnings at Verizon were also better than expected, while revenue growth was in line. Delta shares gained after the airline’s earnings came in above forecast.
IBM will report its results after the closing bell. A spate of company earnings will follow later this week from heavyweights such as Microsoft and Netflix.
Expedia shares fell on reports the online travel company has lost 25% of its “search visibility” on the web.
Dow Chemical shares jumped after activist investor Dan Loeb’s Third Point Capital announced a “significant” stake in the company. Loeb is calling for a “strategic review” of Dow’s operations, according to a letter posted on hvst.com.
Overall, earnings are expected to be up 5.9% in the fourth quarter for the companies in the S&P 500, according to FactSet Research. A few weeks ago, the forecast was for earnings growth of 6.3%, but the estimate was revised lower this week due to disappointing reports, including lower profits in the energy sector.
European markets posted slight gains in morning trading. Asian markets rose Tuesday, supported by China’s central bank injecting billions into the financial system to boost liquidity.
Chinese stocks were also supported by a spate of initial public offerings, which come after Beijing ended a 14-month IPO ban.
