The record will show that the Dow Jones Industrial Average (INDEX: ^DJI ) gained a paltry 5 points today, or 0.04%. However, because of the price-weighted structure of the index, it would have climbed nearly 1% had it not been for IBM's (NYSE: IBM ) 4.9% fall. With shares priced near $200, Big Blue is responsible for about one-sixth of the blue-chip index, almost more than double any other component, meaning a big swing in the stock will move the Dow significantly.
IBM's sharp drop today came after a poor earnings report last night, as revenue dipped in every segment, leading to downgrades from two investment groups. This was the second quarter in a row that revenue declined, after growth had slowed significantly before that, and concerns have grown about its long-term profit. IBM did manage to eke out an earnings beat thanks to share buybacks.
Fellow tech giant Intel (Nasdaq: INTC ) followed IBM downward with a lackluster earnings report of its own. Shares in the chipmaker fell 2.5% as it took a hit from slowing PC sales and a writedown because of excess capacity. EPS again beat estimates, but investors were nonplussed by flat-lining revenue and a scaled-back outlook.
Financials Bank of America (NYSE: BAC ) and American Express (NYSE: AXP ) both reported earnings today to a middling response. Shares of B of A slipped by 0.2% as the company beat on the bottom line but missed on the top. Breakeven EPS topped the $0.07 loss the Street was looking for, but net income dropped 95% from a year ago. Still, the company expressed confidence in the recovering mortgage market and saw 27% growth in small-business lending. Shares of American Express, meanwhile, were down slightly in after-hours trading as net income ticked up by 1% and revenue grew by 4%. EPS of $1.09 matched Wall Street expectations while revenue was just shy. Spending by domestic cardholders grew by 8%, and the company said credit quality remains strong.
Elsewhere on the Dow, Alcoa (NYSE: AA ) led the gainers, rising 2.7% on surprisingly strong housing numbers. Housing starts and new building permits reached levels not seen since 2007, topping expectations by more than 10%. The 872,000 housing starts represented a 34% gain from a year ago, and fellow cyclical Caterpillar also jumped 2% on the news.
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