On Monday, US stocks were mixed as the Nasdaq and S&P gained but the Dow dropped on disappointing IBM quarterly results.
IBM shares dropped to $169.84 by 6.7% as the largest drag on the Dow and the S&P 500, after the company’s Q3 earnings dropped short of the expectations of Wall Street. IBM said that it would pay $1.5 billion in cash to Globalfoundries over the next three years to acquire its semiconductor unit, as reported by Reuters.
The weakness in IBM produced a significant decline in the Dow Jones Industrial Average, accounting for around 80 points.
Wunderlich Securities chief market strategist, Art Hogan said, “IBM is in a transition and will need to continue to be in transition to catch up. They are nonexistent in mobile and weak in the cloud and just paid somebody to take their semiconductor business, it’s a company in transition.”
He added, “We can look at earnings misses as they should be viewed, which is company specific.”
The Dow Jones Industrial Average dropped 0.27% or 44.83 points to 16,335.58 while the Nasdaq Composite Index gained 0.67% or 28.60 points to 4,287.04. The S&P 500 added 0.35% or 6.58 points to 1,893.34.
USA Today quoted Bespoke Investment Group co-founder, Paul Hickey as having said, “Even though IBM fell short on earning per share and revenue, we would caution reading too much about the broader economy on this news.”
Hickey added, “In other words, the decline in revenue is not a new trend, and we don’t feel it’s representative of the trend in earnings season thus far.”
The largest percentage climber on the Nasdaq was Keurig Green Mountain by 3.1% and the largest decliner was NetApp by 2.3%.
Tesoro was the largest gainer on percentage on the S&P 500 by 6.4% while IBM was the largest decliner.
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