By Anora Mahmudova and Carla Mozee, MarketWatch
Netflix soars after beating estimates by wide margin
NEW YORK (MarketWatch) -- U.S. stocks ended Tuesday's choppy
session with marginal gains, as technology stocks led advances. The
main benchmarks turned big early losses into gains, only to end
roughly where they started the session.
Intraday volatility reflects uncertainty about the monetary
policy in Europe, with investors appearing skeptical about the
ability of central banks to combat deflationary forces.
The European Central Bank is widely expected to announce a
government-bond-buying program on Thursday; however, the program's
scope may disappoint investors, analysts have warned.
U.S. markets were closed on Monday in observance of the Martin
Luther King Jr. holiday.
The S&P 500 (SPX) closed 3.13 points, or 0.2%, higher at
2,022.55, with technology stocks in the lead.
The Dow Jones Industrial Average (DJI) ended with a marginal
gain of 3.66 points to 17,515.23.
The Nasdaq Composite (RIXF) outperformed other indexes, adding
20.46 points, or 0.4%, to 4,654.85. Apple Inc, (AAPL) the largest
component on the index accounted for a big portion of the gains, as
the stock rose 2.6%.
Ten-year Treasurys rallied but trimmed initial gains. The yield
declined by 1.2 basis points to 1.803% at the close. The yield on
the benchmark debt has steadily declined over the past 12
months.
"The big elephant in the room is deflation, and many portfolio
managers are beginning to adjust their models to work in a
low-interest-rate environment," said Marty Leclerc, chief
investment officer of Barrack Yard Advisors. "That adjustment
period spells volatility."
Leclerc stressed that in the short term the environment will be
favorable for stocks, as investors may justify higher
price-to-earnings ratios when real interest rates are at zero.
Peter Cardillo, chief market economist at Rockwell Global
Capital, said the day's action is all about the fear of a global
economic slowdown. "We are in the midst of earnings, and markets
are not reacting to positive results, and the culprit is concern
about Asia and Europe," he said. "The bond market is afraid of
deflation, which is why we are seeing such low yields on long-dated
Treasurys."
In economic news, a gauge of confidence among home builders
ticked down this month by one point to 57, staying close to the
highest level since late 2005, according to National Association of
Home Builders/Wells Fargo data released Tuesday morning. Readings
above 50 signal that builders, generally, are optimistic about
sales trends.
Home-builder stocks were down sharply. PulteGoup Inc. (PHM) fell
3.6% and D.R. Horton Inc. (DHI) declined 3.4%.
Tuesday has been a choppy day for equities. Stock futures had
been climbing after better-than-expected economic data from China,
whose gross domestic product expanded 7.4% last year, beating
market expectations of 7.2%. Still, that marked the slowest rate of
growth since 1990 for the world's second-largest economy.
Meanwhile, European equities traded near seven-year highs ahead of
an expected unleashing of a sovereign-bond-buying plan by the
European Central Bank when policy makers meet Thursday.
Earnings results: Morgan Stanley's (MS)quarterly results missed
analyst expectations, and shares fell 0.4%.
Netflix Inc (NFLX) shares soared 12% in aftermarket trade, after
profits surged past estimates and provided an upbeat outlook for
net subscriber additions.
Delta Air Lines Inc. shares (DAL) jumped 7.3% after the company
beat estimates,reporting fourth-quarter revenue of $8.24
billion.
Shares of Halliburton Co.(HAL) rose 1.8% after the company
reported better-than-expected results but warned that 2015 could be
a challenging year for the oil-field services company, which is
planning to acquire Baker Hughes Inc. (BHI)
Consumer-products heavyweight Johnson & Johnson (JNJ) beat
profit expectations, but sales fell shy of estimates. Shares fell
2.6%.
Twitter Inc.(TWTR) in a blog post Tuesday said it's buying
India-based mobile-marketing company ZipDial for an undisclosed
sum. Shares rose 0.7%.
DreamWorks Animation SKG Inc.(DWA) last week started letting
workers go, the Wall Street Journal reported.
Other markets: Chinese stocks rose nearly 2% after Monday's
selloff and Japan's Nikkei Average closed 2.1% higher, its
strongest percentage gain in a month.
Gold futures (GCG5) rose more than 1% for their seventh
consecutive daily gain. Crude-oil futures settled sharply lower
Tuesday. Crude futures for delivery in February (CLG5) fell $2.30,
or 4.7%, to end at $46.39 a barrel.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires