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It seemed as if U.S. stocks forgot to show up to the party today, after Wall Street closed flat while international markets continued to rise. World markets rose significantly on the expectation that European Central Bank President Mario Draghi would soon back up his promise to do whatever it takes to preserve the euro, likely through buying back Spanish and Italian government debt. However, this promise does set markets up for a crash should no such stimulus measures be implemented. Still, global investors seemed optimistic, as the European indices, including the FTSE 100 and DAX, gained more than 1% and Asian indices posted similar gains.
So where were the corresponding gains in American markets? It seems domestic investors were more hesitant following the best two-day run this year, and plenty of U.S. economic data and central bank meetings will likely provide direction in upcoming market sessions. Also, this quarter's earnings reports have been lukewarm at best, as only 42% of companies have beaten revenue estimates so far, compared with an average of 60% from the past four years. This may demonstrate investors' tendencies to focus on the negative outlook, as 72% of companies have beaten earnings projections, but this discrepancy has investors on edge. At market's close, the Dow Jones Industrial Average (INDEX: ^DJI ) lost a meager 0.02% while the S&P 500 slid 0.05%.
Market in focus
Apple (Nasdaq: AAPL ) continued to make up ground following its sell-off after releasing disappointing earnings. Last week's drop now looks like a minor setback for the tech giant, which is already back near $600. Apple missed earnings largely because iPhone sales slipped as consumers delay their next purchases until the iPhone 5 comes out. In another storyline, jury selection for the U.S. patent battle between Apple and rival Samsung kicked off today, with billions at stake as the top two consumer-electronics corporations in the world will argue who ripped off whom.
Apple also got a boost in advance of Cirrus Logic's (Nasdaq: CRUS ) earnings report after hours today. Cirrus Logic, an audio-chip supplier in previous iPhones, missed expectations for the previous quarter but announced a huge projected leap in revenue for the upcoming quarter. This is a not-too-subtle hint that Cirrus will greatly benefit from the introduction of the iPhone 5 in the fall. Shares of Cirrus Logic gained 3% on the day and then soared almost 20% after hours. Apple shares gained 1.7% on the day and 0.3% so far after hours.
One of the worst performers on the S&P 500 today was Avon Products (NYSE: AVP ) , which fell 4.5% on the day. Avon will release earnings before the market opens Wednesday, and investors expect the announcement to reveal the direction new CEO Sherilyn McCoy has taken with the company. The cosmetics company also has been embroiled in a multiyear bribery investigation, and a report indicated that federal prosecutors will be meeting with ex-CEO Andrea Jung in the near future. Looks like this could be a growing headache for Avon investors.
Sprint Nextel (NYSE: S ) posted the second largest gain on the S&P 500, adding more than 4.5%. Sprint has attracted a growing share of the iPhone market in the past quarter, adding nearly 1.5 million subscribers with its popular unlimited data plan. Investment analysts at Deutsche Bank raised their target price on shares to $4.00 from $3.00 on the telecom company's future outlook. Likewise, Jim Cramer also upgraded the beaten-down stock to a buy, which could have motivated part of today's gain.
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