After yesterday's 291-point drop in the Dow Jones Industrials (DJINDICES:^DJI), investors came into Wednesday morning hoping that positive earnings results would lead to a bounce back for the stock market. Indeed, powerful results from Apple (NASDAQ:AAPL) last night set the tone for an upward move when the market opened, and strength from aerospace giant Boeing (NYSE:BA) looked like it would give the Dow a lift, as well. Yet by 11:45 a.m. EST, the Dow had given back most of its gains and was up just 40 points. Even as earnings helped lift tech stocks, further weakness in the energy market sent Chevron (NYSE:CVX) and ExxonMobil (NYSE:XOM) downward and weighed on the markets as a whole.
Crosscurrents continue to whipsaw markets
Investors in Apple and Boeing certainly had nothing to complain about. For Apple, the December quarter was a blowout, with the company selling 74.5 million iPhones as the newly released iPhone 6 and 6 Plus achieved blockbuster sales results. Even as the company struggled against the headwinds of a strong U.S. dollar, gains in China, Europe, and the Americas all climbed at 20% or more, with only Japan marking a relatively slow spot for Apple's success. Apple soared 7% in morning trading.
Meanwhile, Boeing climbed 6% after the aerospace giant topped analyst projections in its fourth-quarter results. Net income rose by nearly 20% on a 2.9% boost in revenue, and adjusted operating earnings crushed expectations on the strength of Boeing's commercial aircraft division.
Even though Boeing's defense division saw substantial declines, the unit's revenue now makes up less than half of what the commercial business brings in, and Boeing is trying to restructure the unit to help it compete more effectively. Investors were also willing to ignore weak projections for Boeing's 2015 earnings, instead focusing on higher sales guidance for the year.
Energy prices had a downward effect on the markets, though. Crude oil prices fell another 2%, with West Texas Intermediate falling back to about $45 per barrel. ExxonMobil and Chevron fell in tandem, losing 1.2% and 1.8%, respectively, reflecting the growing concerns about the future of the energy industry.
Already, companies are starting to look at ways to be more efficient, with Chevron saying it would partner with rivals BP and Conoco on exploration efforts of offshore leases in the Gulf of Mexico. Such moves are necessary to help rein in capital expenditures while still finding the new supplies necessary for Chevron, ExxonMobil, and other oil giants to keep their production volumes up.
Moreover, energy is having impacts outside the oil and gas industry. Even at Boeing, lower fuel prices raised concerns that airlines might stop wanting so many fuel-efficient aircraft designs, potentially reversing the trend that has led to explosive growth in the aerospace industry.
So long as energy-market prospects remain uncertain, the stock market will likely continue to see the volatility it has experienced for several months. As a result, investors shouldn't necessarily count on favorable earnings from major companies to lift the Dow and the broader stock market until those concerns are resolved favorably.