Mixed week for US stocks after uneven earnings

Traders work on the floor of the New York Stock Exchange on July 3, 2014 in New York City
Traders work on the floor of the New York Stock Exchange on July 3, 2014 in New York City (AFP Photo/Andrew Burton)

New York (AFP) - Mixed corporate earnings produced varied results on Wall Street this week, resulting in gains for the Nasdaq, losses for the Dow and a nearly flat S&P 500.

The tech-rich Nasdaq Composite Index, buoyed by strong results from Apple and Facebook, advanced 17.41 points (0.39 percent) on the week to 4,449.56.

But the Dow Jones Industrial Average, weighed down by some disappointing results from blue-chip companies, dropped 139.61 (0.82 percent) to 16,960.57.

Splitting the difference was the S&P 500, the most broad-based of the three leading indices, which finished essentially flat at 1,978.34, up 0.12 of a point.

Earnings took center stage given a relatively light week of US economic data that will pick up considerably next week.

Market observers were positive on earnings season after the initial wave of reports. But there was greater hesitancy by week's end as more companies disappointed.

"It's been an okay, but not a great, earnings season, and not enough to get some momentum behind the market to make higher levels," Michael James, managing director of equity trading at Wedbush Securities, said Friday.

-Blue chips battered-

Some of the biggest disappointments came from the 30-member Dow.

Aviation giant Boeing (-1.0 percent for the week) boosted its 2014 profit forecast on better-than-expected earnings, but rattled the market by disclosing a $272 million after-tax charge to reflect additional work on the huge KC-46A Tanker program for the US Air Force.

McDonald's (-3.3 percent) found itself facing tough questioning from analysts after reporting another set of lackluster profits on fairly flat global sales that resulted in a 0.7 percent drop in earnings compared with a year ago.

The fast-food giant also contended with a food safety scandal in Asia after Shanghai officials shuttered a food supplier for mixing out-of-date meat with fresh product following an investigative report by a local television station.

On Friday, McDonald's said its restaurants in Japan had stopped selling products made with chicken from China.

Other blue-chip companies to disappoint included Coca-Cola (-3.4 percent) and Visa (-2.5 percent).

But not all of the underperformers came in the Dow.

Online retailing giant Amazon, a Nasdaq stock, plummeted nearly 10 percent Friday after reporting a net loss of $126 million for the second quarter, much bigger than the $7 million loss a year ago.

Analysts said the market is losing patience with the online retailer despite strong revenue growth.

But the weak Amazon report was more than offset by positive news from Apple (+3.4 percent), which notched an 11.6 percent rise in quarterly profits to $7.7 billion behind strong iPhone sales, and Facebook (+9.9 percent), which saw quarterly profits more than double to $791 million, thanks to strong ad revenues.

Of the 229 companies in the S&P 500 to report earnings so far, 155 have beaten analyst expectations, 41 have missed and 33 have met, according to S&P Capital IQ.

Next week's earnings calendar is also heavy and includes Dow members ExxonMobil, Pfizer and Procter & Gamble, as well as microblogging site Twitter and UPS.

The week will also feature a busy schedule of economic data, including the July labor market report, the S&P Case-Shiller index of home prices for May, the Conference Board's report on consumer confidence for July and the first assessment of second-quarter gross domestic product.

Analysts are also looking ahead to a two-day monetary policy meeting of the US Federal Reserve concluding Wednesday.

International crises in Ukraine and Israel also have the potential to rattle investors.

While analysts say the market has generally been more focused on economic news compared with the problems in Ukraine and Gaza, unexpected negative developments in these regions could spark selling.