On another volatile day, the Dow Jones Industrial Average (^DJI 0.13%) finished down 115 points, or 0.8%. However, the IBM (IBM +1.93%) effect was in full splendor today as the tech giant once again pushed the blue chips down disproportionately. Since the Dow is price-weighted, IBM contributes a sixth of the value of the index, and today, it knocked an additional 0.4% off the finish. Meanwhile, the broad-based S&P 500 fell just 0.4%, and the tech-heavy Nasdaq actually closed up slightly.
There was no particular negative news pushing stocks down today, as equities were likely taking a breather after three days of strong gains. Consumer sentiment numbers beat expectations, coming in at 84.1 for June versus projections of 82.7, but the Chicago Purchasing Managers Index missed estimates by four points. Still, it showed an expansion in manufacturing with a 51.6 reading, indicating that that sector continues to improve. Of the two, the consumer confidence numbers seem to be more important as survey director Richard Curtin interpreted the results, saying, "Consumers believe the economic recovery has achieved an upward momentum that will not be easily reversed." The continuing high level of consumer confidence should reassure investors that the economy won't collapse, even as the Fed tapers its stimulus.
As alluded to above, IBM was the Dow's biggest loser today, falling 2.3%, in tandem with rival Accenture, which tumbled 10.3% after sales badly missed estimates, and the consulting firm slashed its guidance for the current quarter. IBM has had difficulty finding ways to add revenue in recent quarters, and Accenture's miss could be a further indicator that IT management-consulting is now a slow-growth or no-growth field.
Home Depot (HD 2.36%), on the other hand, was the blue chips' best performer today, gaining 1.6%. There was no company-specific news on the home-improvement retailer, but it seems to have benefited from the recent easing in interest rates, the rise in which had been making investors nervous about the housing recovery's ability to continue. The strong consumer confidence numbers also add credibility to the bull thesis for Home Depot.
Outside the Dow, Blackberry (BBRY +3.27%) shares were looking rotten today, falling 28% after the smartphone maker posted a worse loss than expected. The industry's first mover said it shipped just 2.7 million of the new Blackberry 10s in its first quarter, spelling concern that its turnaround plan will not come to fruition. Despite the new phone, its subscriber base continued to decline, and the company posted a per-share loss of $0.16 against analyst expectations of a profit of $0.05 a share.
