Stocks were lower on Wednesday after uninspiring earnings from IBM and Intel, while Chesapeake Energy slumped after a Reuters report highlighted large and unusual personal loans taken by its chief executive.
International Business Machines Corp
The lackluster reports from the two technology heavyweights came at the start of what has been a strong earnings season. The S&P 500 had its best day in a month on Tuesday as Coca-Cola Co
Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, Tennessee, expects the market to continue its back-and-forth, possibly trending lower in the second quarter after strong gains earlier in the year.
A consolidation or correction phase in the second quarter would make the most sense, and probably it would be the most healthy thing for the market, he said.
Market breadth was worse than the relatively slight losses suggested in the late morning. On the New York Stock Exchange, two stocks declined for every one that rose.
Chesapeake Energy Corp
Chesapeake was the most actively traded stock on the NYSE, outstripping even Bank of America with its massive share float.
I think where there is smoke, there may be fire, and investors are still in a shoot-first mentality, said David Lutz, a trader a Stifel Nicolaus in Baltimore.
The Dow Jones industrial average <.DJI> dropped 71.18 points, or 0.54 percent, at 13,044.36. The Standard & Poor's 500 Index <.SPX> was down 6.80 points, or 0.49 percent, at 1,383.98. The Nasdaq Composite Index <.IXIC> was off 17.60 points, or 0.58 percent, at 3,025.22.
IBM lost 2.5 percent to $202.32 and Intel fell 1.7 percent to $27.98. The PHLX semiconductor index <.SOX> declined 1.2 percent.
According to Thomson Reuters data, 22 companies in the S&P 500 were expected to report on Wednesday, including American Express Co
Of the 56 S&P 500 companies reporting through Wednesday morning, 79 percent beat Wall Street estimates.
Investors should not overreact to positive news nor should they be overreacting to really what could be viewed as isolated earnings reports. One report does not make a trend, unfortunately, said Tim Speiss, a partner at Eisner Amper in New York.
SXC Health Solutions Corp
Genworth Financial Inc
Berkshire Hathaway Inc's
(Reporting By Edward Krudy; editing by Jeffrey Benkoe)