Stock indexes were mixed in afternoon trading on Wall Street Thursday as solid profits and forecasts from several technology companies offset a batch of disappointing earnings reports.
The S&P 500 was holding on to a tiny gain after spending much of the day wobbling between small gains and losses. Trading has been choppy this week as investors review how companies fared in the third quarter and their outlook heading into 2020.
Investors have braced for weaker results this earnings season, reflecting worries about the impact of the costly trade war between the U.S. and China and slowing economic growth worldwide.
Earnings reports in the last couple of weeks, representing roughly a third of companies in the S&P 500, have mostly exceeded Wall Street analysts’ modest expectations. However, many companies that delivered improved results for the third quarter have also issued disappointing profit outlooks.
“What we would have needed to see for the market to be really cheering this (earnings) story is if companies were beating and then raising forward expectations,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “But you’re not seeing that very consistently.”
Solid quarterly report cards from Microsoft, PayPal and Lam Research helped technology stocks march higher Thursday. Microsoft rose 2%, PayPal climbed 8.7% and Lam Research surged 13.1%.
The tech sector, already the biggest gainer this year, almost singlehandedly accounted for the market’s gains.
Traders also cheered encouraging results from several retailers, including O’Reilly Automotive. The auto parts seller jumped 9.1% after it delivered better-than-expected results for the third quarter. It also raised its profit forecast.
Other earnings reports and outlooks put investors in a selling mood. Twitter plunged on weak financial results, pulling communications services stocks lower.
Shares in several companies also fell after they posted mixed results or lackluster profit outlooks: Ford slumped 6.4%, 3M lost 3.6%, eBay tumbled 9.3% and Stanley Black & Decker dropped 4.2%.
Bond prices were little changed. The yield on the 10-year Treasury held at 1.76%.
KEEPING SCORE: The S&P 500 index was up 0.2% as of 3:35 p.m. Eastern time. The Dow Jones Industrial Average fell 21 points, or 0.1%, to 26,812. The Nasdaq, which is heavily weighted with technology stocks, climbed 0.7%. The Russell 2000 index of smaller stocks slipped 0.1%.
European markets closed broadly higher.
EARNINGS SCORECARD: One-third of companies within the S&P 500 have reported their latest financial results and have so far eased investor concerns about a sharp contraction. Companies within the index reported just over a 1.2% drop in profit overall, according to FactSet. That is currently much better than initial expectations for a more than 4% contraction.
INJURED BIRD: Twitter dove 20.7% after reporting disappointing third quarter profit and revenue. The social media company blamed some of its problems in the most recent quarter on bugs related to its advertising platform. It also gave investors a weak revenue forecast for the fourth quarter.
CHARGING AHEAD: Tesla surged 16.9% after the electric car maker surprised Wall Street with a solid profit. Analysts expected the company to report another loss as it struggles to increase sales. The company took several cost-cutting measures, including layoffs, during the quarter.
GAINING ALTITUDE: Solid profits helped lift American Airlines 3.8% and push Southwest Airlines 5.4% higher. American Airlines beat Wall Street profit forecasts thanks in part to lower prices for jet fuel.
Southwest Airlines overcame the grounding of its Boeing 737 Max jets to beat analysts’ profit forecasts. It reported strong travel demand and rising ticket prices.
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AP Business Writer Damian J. Troise contributed.