Stocks opened higher Wednesday, dipped into negative territory around midday, and recovered in the afternoon. The Dow Jones Industrial Average (DJINDICES:^DJI) made a nice gain after several of its bigger components had positive earnings reports, and while the S&P 500 (SNPINDEX:^GSPC) also closed up, advancing issues were about equal with declining ones on all the major exchanges.
Today's stock market
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The consumer staples sector was the best performer, with the Consumer Staples Select Sector SPDR ETF (NYSEMKT:XLP) up 1.2%. Energy stocks moved lower on a drop in oil prices; the Energy Select Sector SPDR ETF (NYSEMKT:XLE) fell 1%.
IBM sees profit growth in 2019
IBM reported fourth-quarter profit that beat expectations, but it was a cheery outlook for 2019 that resonated with investors, and the stock jumped 8.5%. Revenue fell 3.5% to $21.8 billion, roughly what the market was expecting. Adjusted earnings per share from continuing operations came in at $4.87, down from $5.14 in the period a year ago, but above the analyst consensus of $4.81.
Adjusted for currency, revenue fell only 1%, with strong showings from the company's services business and cognitive solutions, which grew 6% and 2% respectively. Those gains partially offset a 20% decline in the company's mainframe business, which had a tough comparison due to the rollout of the IBM Z program last year.
Guidance for non-GAAP EPS in 2019 of $13.90 compared with $13.81 in 2018 may seem like just more anemic growth, but it was better than the $13.79 Wall Street was expecting. IBM executives on the conference call touted success in its cloud business and the opportunities that the acquisition of Red Hat will create, and that was enough to exceed the market's low expectations.
Strong sales growth boosts Procter & Gamble
Consumer giant Procter & Gamble reported strong organic sales growth for the second quarter in a row and raised guidance, propelling shares up 4.9%. Sales of $17.4 billion were flat from the year before, but organic sales, which exclude the effects of currency, acquisitions, and divestitures, increased 4%. Core earnings per share came in $0.04 above expectations at $1.25, up 5% from last year and 13% on a currency-neutral basis.
Sales gains were led by the beauty segment, with organic growth of 8%, and 6% growth in fabric and home care, P&G's largest business.
P&G increased the top end of its guidance for earnings growth in 2019 by 1 percentage point to a range of 2% to 4%. The company maintained its earnings guidance, though, saying it faces a $1.4 billion headwind from foreign exchange and higher commodity and transportation costs.