February 27, 2021

Stocks Close Flat as Investors Parse Quarterly Results

The markets opened higher but then sank. While crucial sectors like energy and financial stocks recovered on Wednesday, after leading the overall market decline on Tuesday, technology shares were dragged lower as Dell dropped more than 10 percent.

On Tuesday, Dell said that a weaker economy had lowered demand, flattening its sales in the quarter that ended July 29, and that it had pared low-margin products. Its net income rose 63 percent in the quarter, but it lowered its revenue forecast for the rest of the year.

The technology sector was down about 1 percent at the market close. The consumer discretionary index dipped 0.38 percent. Abercrombie Fitch, the retailer, was down more than 8 percent and led the list of leading decliners among the 10 most actively traded shares during most of the session. In reporting its results, Mike Jeffries, the chief executive, said the company faced greater uncertainty this year.

“Costing pressures will be greater in the second half of the year, and macroeconomic uncertainty has increased,” Mr. Jeffries said. “However, our strong top-line momentum and overall performance for the past several quarters give us confidence that we are well positioned to navigate through this environment.”

A range of stocks gained on Wednesday, including those in telecommunications, utilities and consumer staples. Investors extracted guidance about the economy and consumer spending from results.

Seasonal factors appeared to help Target, for example, which reported a higher quarterly profit aided by school-related sales toward the end of the period. Its shares rose more than 2 percent. Staples closed slightly lower. It raised its outlook and its earnings exceeded expectations.

But the technology sector in particular, after the Dell results, “cast a pall over consumer spending and business spending for that matter,” said Mark D. Luschini, the chief investment strategist at Janney Montgomery Scott in Philadelphia.

“That is the overarching theme,” Mr. Luschini said. “Everybody is looking for any kind of signal or litmus test as to which way this is going to break.”

If the consumer pulls back because of political, economic or equity-related uncertainties after the recent market swings, he added, “that doesn’t leave a whole lot of horsepower to drive our economic activity, further enticing the risk of a recession.”

Over all, the declines in the equities market were slight — less than 1 percent in each of the three main indexes — but a reversal from the trend in early trading.

The market is recovering from volatility last week, and fell on Tuesday in the aftermath of a meeting between leaders of the euro zone’s two largest economies, France and Germany.

While many contend that the equities markets will remain unsteady for some time, bargain-hunters are benefiting from the recent lows.

“I think that the market is still reacting to a pretty oversold condition technically,” Tom Samuels, managing partner for Palantir Capital Management, said on Wednesday.

Mr. Samuels said that through early September, the market might continue to be “a little bullish,” but for now the respite was a time to reposition portfolios. Still, the balance was so tenuous that the financial markets were “one fundamental announcement” away, he added, from additional problems coming out of the euro zone or from economic statistics.

“There could be some more rough sailing ahead once we get out of August,” he said.

At 4 p.m., the Standard Poor’s 500-stock index was up 0.09 percent at 1,193.88. The Dow Jones industrial average was up 0.04 percent at 11,410.06 and the Nasdaq was 0.47 percent lower.

The yield on the 10-year Treasury note was 2.15 percent, compared with 2.23 percent late Tuesday.

After last week’s extreme volatility, with swings of hundreds of points, Wall Street tacked on gains over three consecutive trading days that helped shares recover by Monday from losses in the wake of the Aug. 5 downgrade of America’s long-term credit rating.

But then the markets declined on Tuesday after talks in Paris between Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France that analysts said fell short of easing concerns over how the euro zone’s finances would be handled.

On Wednesday, there appeared to be an early rally leading the riskier side of the market, and some strength in the commodity sector after a relatively benign reading in an important indicator of producer prices, Mr. Samuels noted.

The broadest indicator of wholesale prices edged up 0.2 percent in July, according to the Labor Department. Not counting food and energy, the indicator, the Producer Price Index, was up 0.4 percent, the most rapid increase in six months.

Article source: http://feeds.nytimes.com/click.phdo?i=82f3ccbb4068aec718f41f11a840ab8b

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