US stocks wavered between slight gains and losses attempting to extend gains as investors assessed a slew of first quarter earnings reports and news of mergers.
Most of the big companies releasing earning reports on Tuesday beat expectations with more than 75% of the S&P companies that have reported their first quarter earnings so far topping estimates. This is more than the 70% averaged in the last four years.
“Earnings have been a little better than reduced expectations, and with interest rates as low as they are, corporations like Teva are able to continue issuing debt at basically free levels,” Andrew Brenner, the head of international fixed income for National Alliance Capital Markets, told Bloomberg by phone.
The Dow Jones Industrial Average fell 50.34 points or 0.3% to 17984.96. The blue-chip index was weighed down by declines in some of its components including DuPont and UTX after their earnings were weighed down by a robust dollar.
The dollar is more than 9% up against other currencies in 2015 with a strong dollar hurting companies with overseas operations.
The S&P 500 Index inched up 4 points or 0.2% to 2105.10 points with six of its ten key sectors recording gains.
“The S&P 500 has been stuck in a range between 2,040 and 2,120 since February, as different forces are pushing and pulling this market,” David O’Malley, CEO of Penn Mutual Asset Management with $20 billion in assets under management, told MarketWatch.
“The bullish case for stocks is based on PE expansion but it is hard to imagine given the drop in earnings, the Fed tightening plans and global weakness.”
The technology heavy Nasdaq composite 22 points or 0.5% to 5,017 points boosted by gains attributed to merger news in the biotechnology industry. The index is now just 0.6% below its record close recorded in March 2000.
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