Wall St up as IBM shares sink

Specialists Ronnie Howard, left, and Christopher Culhane confer on the floor of the New York Stock Exchange. File photo / AP

Wall Street rose overnight amid solid corporate earnings, even as IBM proved the exception.

In afternoon trading in New York, the Standard & Poor's 500 Index rose 0.51 per cent, while the Nasdaq Composite Index added 0.87 per cent.

Shares of Apple gained, last up 1.7 per cent, before the company is scheduled to report its latest earnings after the market close on Monday.

According to Thomson Reuters data through Monday morning, of 87 companies in the S&P 500 that have reported quarterly earnings, 63.2 per cent beat analyst expectations, in line with the 63 per cent average since 1994 but below the 67 per cent rate for the past four quarters.

The Dow Jones Industrial Average fell 0.15 per cent, dragged down by a 7 per cent plunge in shares of IBM. The company reported a slide in quarterly profit and jettisoned its 2015 earnings forecast. IBM said it would offer a new 2015 target in January.

"We are disappointed in our performance," Ginni Rometty, IBM chief executive officer, said in a statement. "We saw a marked slowdown in September in client buying behaviour, and our results also point to the unprecedented pace of change in our industry."

The company is struggling to transform itself to better, and faster, adapt to clients' demands.

"IBM is selling the services for the old-school Humvee when customers are buying Teslas," Daniel Ives, an analyst at FBR Capital Markets, told Reuters. "The market is evolving and IBM needs to change their strategy accordingly."

Oil prices fell, with Brent crude falling below US$86 a barrel.

Hans Van Cleef, energy economist at ABN Amro Bank in Amsterdam, told Reuters he expected Brent crude to decline further as oil supply exceeded demand.

"A test of the US$75 to US$80 range could be seen this week or next week," van Cleef said.

In Europe, the Stoxx 600 ended the session with a 0.5 per cent drop from the previous close.

The UK's FTSE 100 Index fell 0.7 per cent, France's CAC 40 gave up 1 per cent, while Germany's DAX sank 1.5 per cent.

Shares of Germany's SAP SE plunged 5.8 per cent after the supplier of business-management software downgraded its full-year earnings forecast.

"SAP has a sticky, high-margin customer base that's very cash generative," Paul Moran, head of research at Aviate Global in London, told Bloomberg News before the announcement. At it moves those clients to the cloud, "the uncertainty now is what's going to happen to margins in the next few years."

The German central bank added to rising concerns about the outlook for the euro zone's power economy, saying in its monthly bulletin, that it sees little improvement in the next few months.

"The total economic result should be on the level of the second quarter or even slightly higher," the Bundesbank said of the third quarter. "Given the weak orders and the downbeat mood among companies, the outlook for the final quarter of the year is similarly modest."