Market up but Wachovia drags

14/04/2008 - 18:09

By Cal Mankowski

NEW YORK (Reuters) - Stocks rose slightly on Monday as a surprising rise in retail sales data for March was offset by an unexpected quarterly loss from Wachovia Corp that hurt bank shares.

Goldman Sachs added to the market's negative tone after it said the quarterly earnings season which is just starting looks "awful" and that reports still to come will be generally disappointing and drive the S&P 500 lower in coming weeks.

Wachovia said it would cut its dividend, eliminate jobs and raise capital of $7 billion after becoming the latest casualty of the global credit crunch. The No. 4 U.S. bank's stock fell 10 percent, dragging the S&P financial sector index <.GSPF> down 2.1 percent.

But retail sales kept a floor under the market after data showed an unexpected increase in March, pushed up by a jump in gasoline sales, according to a government report. An S&P index of retailers' shares <.RLX> was up 0.73 percent.

With earnings season in full swing, investors are taking their trading cues from corporate results. Wall Street analysts expect S&P 500 earnings to show a 13.8 percent decline in quarterly profits compared with an 11.8 percent drop projected one week ago, according to Reuters Estimates.

"People are questioning if we're in a short shallow recession" or something that will turn out to be deeper and more prolonged, said Brian Gendreau, investment strategist at ING Investment Management in New York.

"The fact that the market is not down today is a good sign" and shows that investors are evenly divided about the outlook, Gendreau said.

The Dow Jones industrial average <.DJI> gained 41.04 points, or 0.33 percent, to 12,366.46. The Standard & Poor's 500 Index <.SPX> added 2.24 points, or 0.17 percent, to 1,335.07. The Nasdaq Composite Index <.IXIC> rose 5.56 points, or 0.24 percent, to 2,295.80.

Stocks took a sharp tumble on Friday when economic bellwether General Electric Co reported an unexpected 6 percent drop in earnings.

Oil companies gave the S&P 500 its biggest boost and helped lift the Dow industrials. Shares of Devon Energy gained 3.1 percent to $112.57 and Transocean Inc shares rose 4.8 percent to $152.04.

Exxon Mobil shares advanced 1.4 percent to $89.89 and ranked second among the stocks buoying the Dow average.

U.S. crude oil futures were up $1.46 at $111.60 a barrel on the New York Mercantile Exchange.

But declines in the financial sector limited the advances of both the Dow industrials and the S&P 500.

Wachovia's stock fell 9.9 percent to $25.06 and was the heaviest negative weight on the S&P.

Three other Dow components in the banking sector also declined, with shares of Bank of America down 2.3 percent at $36.09, Citigroup down 4 percent at $22.43 and JPMorgan Chase & Co down 1.3 percent at $41.96. Citigroup and Bank of America contributed the biggest drag on the Dow, curbing its gain at midday.

Movie rental chain Blockbuster Inc said on Monday that it had offered to buy struggling electronics retailer Circuit City Stores Inc . Circuit City shares surged nearly 31 percent at $5.10, while Blockbuster shares slid almost 16 percent to $2.64.

In other earnings news, shares of Eaton Corp rose 1.7 percent to $80.30 after the manufacturer reported higher quarterly profit. Building maintenance supply company W.W. Grainger Inc posted a 12 percent rise in first-quarter profit, beating analysts' forecasts. Its stock rose 3.2 percent to $82.58.

(Editing by Jan Paschal)

Contenido patrocinado

Otras noticias