At least four times today the Dow slipped wildly back and forth between the green and the red in a 110 point range before settling at close at a 38 point loss.  The big drag was IBM which turned in a poor Q1 report.  Transportation stocks did great with rail stock CSX and airline stock United Continental turning in glowing reports, but weak performance from the banks and consumer staples outweighed those.  It also was taken as a negative when today’s Fed report stated that, although the economy is generally doing very well, a trade war with China remains the big outlier, this despite the fact that investors are supposed to be hopeful about China.  Ironically, though today’s bad news brought the Dow down, the good news raised the forecast for Q1 profits almost a full whopping percentage point from 18.6% growth yesterday (and for weeks now) to an almost scary optimistic 19.4 percent today.  As investors wait for more reporting, volume remains below average at just under 6.5 billion. 

wed  APRIL 18, 2018 / 5:43 pm

Energy, transport stocks lift Wall Street, IBM drags

Sinéad Carew

DJ:  24,748.07  -38.56        NAS:  7,295.24  +14.14        S&P:  2,708.64  +2.25       4/18

NEW YORK (Reuters) - The S&P 500 eked out a small gain while the Dow declined after a volatile trading session on Wednesday, with weakness in sectors such as consumer staples and financials offsetting strong gains in the energy and industrial indexes.

Higher oil prices boosted energy stocks while transport stocks such as CSX Corp helped the industrial sector. But IBM’s (IBM.N) 7.5 percent drop was the biggest drag on the S&P after the technology company’s quarterly profit margins missed Wall Street targets.  “There’s a lot of headlines pulling the market in different directions. The most notable is energy prices pulling that sector higher,” said David Joy, chief market strategist at Ameriprise in Boston.

Joy attributed a drop in financial stocks to a flattening yield curve in U.S. treasuries.

“Earnings and the yield curve are the two biggest influences,” said Joy, adding that “transports are very strong today which is a very good sign for the economy.”  No. 3 U.S. railroad operator CSX (CSX.O) jumped 7.8 percent after topping profit estimates. Its news lifted other railroads, and helped to push the Dow Jones Transport index .DJT up 1.7 percent.  Also United Continental (UAL.N) gained 4.8 percent and lifted other airline stocks after reporting a better-than-expected quarterly profit.

Trading was choppy, with the Dow swinging between positive and negative territory while the S&P 500 gave up most of its gains in the last few minutes of trading.

The Dow Jones Industrial Average .DJI fell 38.56 points, or 0.16 percent, to 24,748.07, the S&P 500 .SPX gained 2.25 points, or 0.08 percent, to 2,708.64 and the Nasdaq Composite .IXIC added 14.14 points, or 0.19 percent, to 7,295.24. 

In late afternoon trade the S&P briefly lost ground after a Federal Reserve report said robust business borrowing, rising consumer spending, and tight labor markets indicated the U.S. economy is on track for continued growth, with trade war risks being the one big outlier.  However, Mark Heppenstall, chief investment officer at Penn Mutual Asset Management in Horsham, Pennsylvania, said investors were hopeful for a positive outcome with China.  “China trade tensions seem to have moved to the back burner,” he said. “Earnings are part of the equation as well. The bar was high. There was a risk expectations would outpace what comes through but generally earnings have been favorable.”

Wall Street expects S&P 500 first-quarter earnings to grow 19.4 percent, according to Thomson Reuters data.

Oil futures CLc1 settled up 2.9 percent due to a decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see crude prices closer to $100 a barrel. The S&P energy sector .SPNY was up 1.6 percent. [O/R]

The CBOE Volatility index .VIX ended up 0.35 point at 15.60, its first daily increase after six days of declines.  Lam Research (LRCX.O) fell 4 percent on analyst concerns about a slowdown in demand for its chip equipment.  The Philadelphia SE Semiconductor index .SOX finished down 1 percent. 

Advancing issues outnumbered declining ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.09-to-1 ratio favored advancers.  The S&P 500 posted 39 new 52-week highs and two new lows; the Nasdaq Composite recorded 131 new highs and 36 new lows.

On U.S. exchanges 6.46 billion shares changed hands, compared to the almost 7 billion average for the last 20 days.