Stocks Snap Back, Finish Near Lows
NEW YORK ( TheStreet) -- Stocks lost ground Wednesday, weighed down by lackluster earnings from tech heavyweights Intel(INTC) and IBM(IBM) and nervousness ahead of another round of Spanish bond sales on Thursday.
The pullback follows Tuesday's stellar session, which was the best day for the broad markets in more than a month. Wednesday's selling was widespread but the financials, tech, conglomerates, energy and utilities were under the most pressure. Breadth was negative with winners outpacing losers 2-to-1 on both the New York Stock Exchange and the Nasdaq.
The Nasdaq shed more than 11 points or 0.4% to finish at 3031, recovering from a session low of 3024.
Investors took exception to a disappointing gross margin guidance for the second quarter from Intel, while the source of concern when it came to IBM was a slight miss on the top line. Intel shares lost 1.8%, while IBM's stock was the biggest percentage decliner among the blue chips, giving back 3.5%.
Michael Boyle, senior vice president at Advisors Asset Management, notes that the majority of companies beat Wall Street's expectations each quarter so other factors -- such as guidance, company-specific metrics, or the tone of management's commentary on a conference call -- can matter more than the bottom-line numbers.
"Earnings will be about not just who is beating, but what else is being said," he says, adding later: "We try to look at how many are growing earnings, growing revenue and what happens going into earnings season. If the market is on a tear going into earnings season, usually there's a selloff because nothing will be good enough."
American Express said first quarter profit rose 7%, beating expectations. The stock was flat in after market trading.
YUM! Brands beat expectations with an earnings per share of 76 cents and raised its 2012 forecast, but shares were losing 2% in aftermarket hours.
eBay saw its shares rise nearly 4% in post-session trading after it reported a strong first quarter. Adjusted earnings per share came in at 55 cents, beating estimates of 52 cents per share.
Shares of Qualcomm were plunging 6% in aftermarket hours after it issued guidance below analyst expectations.
Some of the selling late in Wednesday's session was attributed to apprehension about the upcoming auction of 10-year bonds by Spain. If the reception is weak and borrowing costs for the country rise, it could stir up investor fears about sovereign debt contagion and spark a return to risk aversion. Strong demand would assuage investor concerns that Spain is vulnerable to a bailout.