Wall St down as IBM, Netflix drop

Traders James Matthews, left, and John Panin work at the New York Stock Exchange. File photo / AP
Traders James Matthews, left, and John Panin work at the New York Stock Exchange. File photo / AP

Wall Street grappled with disappointing earnings overnight from IBM and Netflix, while it gained support from rising oil prices. The US dollar slid to a 10-month low.

"Investors are very focused on revenue," Chuck Self, chief investment officer of iSectors in Appleton, Wisconsin, told Reuters. "After all the cost cutting over the past five years, now we need to start seeing revenue growth."

Wall Street was mixed. In 2.46pm New York trading, the Dow Jones Industrial Average rose 0.2 percent. However, the Nasdaq Composite Index fell 0.4 percent. In 2.31pm trading, the Standard & Poor's 500 Index added 0.2 percent.

The Dow moved higher as gains in shares of Goldman Sachs and those of DuPont, up 2.3 percent and 1.8 percent respectively, outweighed slides in shares of IBM and those of Home Depot, last down 6 percent and 1.2 percent respectively.

Goldman Sachs shares rose as the company managed to please investors, for now, with steep cost cuts to help stem a drop in profit and sales.

"The performance was not great in the first quarter and, as a result, you saw compensation and benefits expense down 40 percent year-over-year," Goldman Sachs chief financial officer Harvey Schwartz said in a conference call with analysts. "We are shareholders, and we are doing things that you would expect shareholders to do."

Shares of IBM fell after the company posted yet another drop in quarterly revenue and profit, rounding out four years of revenue slides. It offered an outlook for the second quarter that fell short of estimates.

"The stock was up this year-IBM really had to have a stellar number to keep that momentum going," Lou Miscioscia, an analyst at CLSA, told Bloomberg. "It would have needed a very good quarter to continue outperforming the market."

Shares of Netflix sank, last 12.1 percent lower in 3pm trading in New York, after the video streaming service's subscriber forecast failed to meet expectations.

In Europe, the Stoxx 600 Index finished the day with a 1.2 percent increase from the previous close, bolstered by earnings from Danone and Roche.

The UK's FTSE 100 Index advanced 0.8 percent, France's CAC 40 Index gained 1.3 percent, while Germany's DAX Index rallied 2.3 percent.

A strike by oil workers in Kuwait, lowering the country's output by about half, underpinned the price of oil.

"It was a bolt out of the blue in terms of how much oil came off the market so quickly," John Kilduff, partner at Again Capital, a New York energy hedge fund, told Reuters. "Usually these things have a ramp-down period but this seems to be able to flick a switch... It's supportive for the market for now."

- BusinessDesk

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