Banks shrug off McDonald’s and Apple worries
US stocks rebounded late yesterday to end flat, shrugging off lighter-than-expected sales from McDonald’s and lowered iPhone prices from Apple.
The three major US stock indexes had fallen more than 1 per cent before rallying in the last hour of trading, led by bank shares.
Analysts pointed to the S&P 500’s recent piercing of its 200-day moving average as a positive sign, giving investors confidence to buy stocks on dips in the market.
“What we’re seeing is investors, both institutional and individuals, looking at dips as an opportunity to buy,” said Bucky Hellwig, senior vice president at Morgan Asset Management.
“It’s a sign of the broader strength that’s in the market.”
The S&P 500 has rallied 39 per cent since hitting a 12-year closing low on 9 March, leading analysts to speculate a correction was looming, although recent dips have been short-lived.
“The market has been in an uptrend and ever since we broke through that 200-day moving average, the market has been acting pretty well,” said Todd Leone, head of listed trading at Cowen & Co.
“You’re still seeing buyers out there.”
The Dow Jones industrial average gained 1.36 points, or 0.02 per cent, to 8,764.49. The Standard & Poor’s 500 Index dropped 0.95 of a point, or 0.10 per cent, to 939.14. The Nasdaq Composite Index dropped 7.02 points, or 0.38 per cent, to 1,842.40.
After the closing bell, shares of Texas Instruments jumped 5.2 per cent to $20.80 after the chip supplier raised its earnings per share and revenue outlook for the second-quarter.
Financial stocks led the rebound, with JP Morgan Chase & up 2.4 per cent at $35.39. The big US bank’s stock gave the biggest lift to the Dow as investors awaited news from Federal Reserve and Treasury officials, who are expected to announce which banks will be allowed to repay TARP money soon. The KBW Bank index added 1.3 per cent.
McDonald’s was the blue-chip Dow’s primary laggard after the world’s largest hamburger chain said May sales at US restaurants open at least 13 months rose 2.8 per cent, significantly less than the 6.1 per cent growth in the previous month. The stock lost 1.9 per cent to $58.72.
Apple shares slid 0.6 per cent to $143.85. The stock was the heaviest weight on the Nasdaq after the company cut the price on its base model 8-gibabyte iPhone.