Earnings Storm Leaves Dow Flat as UnitedHealth Group, IBM Plunge

Earnings season for the Dow Jones Industrials (DJINDICES: ^DJI  ) hit a climax Thursday, with six index components reporting quarterly results either Wednesday afternoon or this morning. With a mix of positive and negative news, the net impact on the stock market was minimal, with the Dow just above breakeven as of 11 a.m. EDT. Yet given the Dow's push higher earlier this week in yet another attempt to reach record levels, the declines for IBM  (NYSE: IBM  ) and UnitedHealth Group (NYSE: UNH  ) were notable in holding back the average.

IBM fell more than 3.5% Thursday morning following its first-quarter report last night, with its large stock-price decline of about $7 per share creating 45 points' worth of downward pressure on the Dow Jones Industrials. IBM's revenue fell by 4% from year-ago levels, with adjusted earnings falling 15%. Strength in Europe was the only bright spot for the tech giant, with double-digit sales declines in emerging markets and the Asia-Pacific region weighing on overall revenue. Investors are clearly growing impatient with CEO Ginni Rometty's strategy to make the transition from hardware to software and services, even though the long-term boost to margins would be significant enough to outweigh even a permanent loss of revenue if that were to occur. Cloud-computing revenue rose 50%, but with the segment making up a small part of IBM's overall business, investors clearly discounted that growth in sending shares lower.

Meanwhile, UnitedHealth Group declined 3% as the health-insurance giant blamed the cost of the Affordable Care Act for a drop in first-quarter earnings. Even though UnitedHealth did better than investors had expected, net income dropped 8% from year-ago levels, and the insurer said that between reduced funding for Medicare Advantage, insurance taxes, and other requirements, Obamacare cost the company about $0.35 per share in additional expenses. UnitedHealth Group managed to earn some revenue from offering information technology services related to the government's health-insurance exchange Internet portals, but the big question for the company going forward is whether any boost in the number of customers it serves will help offset higher costs.

With the market closed on Friday, this morning's earnings announcement brought this week of earnings season to an end for the Dow. But with eight more Dow components set to announce their results next week, you can bet that investors will see more action in the blue-chip index before the first-quarter earnings season is over and done with.

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