Mixed earnings reports and macroeconomic news drove the Dow Jones Industrial Average (^DJI +0.49%) slightly down today, falling eight points, or 0.06%. A week after initial unemployment claims came in unexpectedly low at 339,000, the pendulum swung in the other direction. The number of newly jobless people today reached 388,000. Seasonality and a late filing by the state of California were to blame for the discrepancy. In a bullish sign for the economy, the Philadelphia Fed's monthly manufacturing report showed an increase in business activity for the first time in five months, with a reading of 5.7, well above the -0.1 that economists had expected. However, they still stress that the sector is suffering.
Across the Atlantic, the euro fell against the dollar, as uncertainty over a Spanish bailout persisted, though Spanish officials at the EU summit said no urgent financial injection was needed. Interest rates for Spanish bonds at an auction today also came down from recent offerings.
The two big winners on the Dow, Verizon (VZ +0.65%) and Travelers, (TRV +0.34%) started the day off strong with solid early morning earnings reports, and finished up 2.4% and 3.6%, respectively. Profit at the telecommunications giant jumped 16% to an adjusted EPS of $0.64 per share, matching estimates. Revenue grew 4%, slightly ahead of analyst expectations, and the wireless segment was strongest with 7.5% top-line growth.
Travelers, meanwhile, more than doubled its net income, posting an EPS of $2.21, well ahead of estimates of $1.61. Revenue, however, grew just 2%, though that was also enough to top estimates. The insurer benefited from a sharp drop in catastrophe-related losses, which fell to $59 million, after clocking in at $394 million last year.
On the down side, IBM (IBM +1.75%) and American Express were the biggest losers, falling 2.8% and 3%, respectively, as investors digested underwhelming earnings reports from both companies. American Express met EPS expectations, though revenue fell a few ticks short of the Street's view, on 4% growth, to $7.86 billion. IBM continued its slide from Wednesday, after revenue declined in all segments, with shares dropping 7.6% over the last two days amid ratings downgrades and concerns that it may be overvalued at a P/E of 14.
Finally, Microsoft (MSFT +0.34%) delivered its earnings report after the bell, sending shares down 1.6% in after-hours trading. Following a trend made evident by several other computing companies, the company's profit fell 22% as PC-demand slowed, sending revenue down 8%, as well. When adjusted for deferrals, however, Microsoft actually beat EPS expectations of $0.56 cents per share, posting $0.65 cents, and topped revenue estimates.
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