Why the Dow's Rally Faltered Today

So far, earnings season hasn't been too kind to the Dow Jones Industrial Average (INDEX: ^DJI  ) . The blue-chip index dropped sharply today, ending the day down 83 points, or 0.6%. Today marked the first day the Dow fell this week, coming off a week that marked its worst year thus far in 2012. In similar fashion, the Nasdaq and S&P 500 also saw red, both declining 0.4% during the trading day.

Investor anxiety ticked slightly upward, with the VIX (INDEX: ^VIX  ) , more commonly referred to as the markets "fear gauge," notching 1% upward. Across the board, investor enthusiasm seems to have waned slightly after U.S. markets experienced one of their strongest runs in almost 15 years. But although investors never like to see stock markets sell off, this isn't the biggest deal in the world, either.

Around the markets
Apparently the investors weren't picking up what tech stalwarts IBM (NYSE: IBM  ) and Intel (Nasdaq: INTC  ) were putting down. Both reported quarterly earnings after the bell yesterday, and both received sharp haircuts today.

Intel reported flat revenue and a decline in profits. Shares of the semiconductor giant fell 1.8% in reaction to the report. Despite its quarterly report, Intel has appeared to be gaining strength of late. The company ended 2011 with its largest share of the global semiconductor market (its 20th consecutive year holding that title) ever. Intel also has its best attempt to break into the mobile market since 2009 coming to market soon. Despite the short-term noise, Intel might have a few tricks left up its sleeve. Like Intel, IBM closed 3.5% down. Revenue fell short of analyst expectations for the quarter as a result of slumping hardware sales. However, Big Blue did beat the Street on profits.

Elsewhere in U.S. markets, oil stock Haliburton (NYSE: HAL  ) popped sharply today on surprisingly strong earnings. The oil-services titan rose 4.6% (what sell-off?) after beating analyst estimates on both the top and bottom lines. On days like today, we see that earnings have a huge impact on the broader market. To highlight some of the most attractive opportunities this quarter and beyond, the Fool recently compiled a research report featuring five stocks for investors to watch this earnings season. We made it absolutely free for our readers, so access your copy today.

Andrew Tonner holds no financial position in any of the stocks mentioned in this article. You can follow him on Twitter at the handle @AndrewTonner. The Motley Fool owns shares of IBM and Intel. Motley Fool newsletter services have recommended buying shares of Halliburton and Intel. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.


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  • Report this Comment On April 19, 2012, at 10:42 PM, sbucholz wrote:

    Despite its quarterly report, Intel has appeared to be gaining strength of late. The company ended 2011 with its largest share of the global semiconductor market (its 20th consecutive year holding that title) ever. Intel also has its best attempt to break into the mobile market since 2009 coming to market soon.

    This is the kind of commentary that drives the average small investor around the bend. Similar observations for IBM, Qualcomm , Microsoft,Wells, etc.Solid progress in tough environment (endless blathering about Europe, Chinese Hard landing, bond yields etc) yet lets beat them to a pulp on decent performance. Meanwhile, back at the IPO post, we'll buy and support any untried concept stock coming down the pike. It gets frustrating doing research and listening to the pros regarding the supposed solid performers only to see them get devastated on reasonable performance due to missing a whisper number or providing lackluster guidance in an insanely volatile market. You can understand why people are frightened to wade into this sewer and stay on the sideline.(low volume whining anyone?) Even a reasonable bet is very likely a loser in this fetid environment.

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