NEW YORK - Investors remained cautious at the start of a big week for company earnings on Wall Street.
About a third of the companies in the Standard & Poor’s 500 index, including Exxon Mobil and Apple, are reporting earnings this week. Analysts currently expect earnings to rise by 2 percent in the first quarter, down from the 7.7 percent increase in the fourth quarter, according to S&P Capital IQ.
While the majority of companies that have reported earnings so far have beaten investors’ expectations, concerns remain about the outlook for revenue for the rest of the year.Earnings forecast may need to be revised lower if the global economy doesn’t improve.
“Most of the companies seem to be coming in ahead of earnings expectations, but the thing that’s still problematic is the revenue line,” said Bill Stone, chief investment strategist at PNC Wealth Management. “To me it’s just symptomatic of the global economy continuing to sputter along.”
On Monday, the Dow Jones industrial average edged higher as energy stocks got a lift from recovering oil prices and investors focused on results from a key industry player.
The energy industry climbed 1 percent, making it the biggest gainer in the Standard & Poor’s 500 index. Oil rose 75 cents, or 0.9 percent, to $88.76 a barrel Monday. A week ago, crude fell below $90 a barrel for the first time this year after reports that China’s economic growth slowed.
Oil services company Halliburton also gained after its loss wasn’t as bad as analysts had forecast. Halliburton rose $1.75 to $38.96 after it said that it lost $18 million in the first quarter, pulled down by $637 million in charges related to its role in the2010 Gulf of Mexico oil spill.
Netflix surged 23 percent to $214.19 in after-hours trading after the company reported that it added 2 million U.S. subscribers to its video streaming service during the first three months of the year. Netflix took a gamble by adding original programming to its service including the critically acclaimed series House of Cards in February.
The Dow rose 19.66 points, or 0.1 percent, to 14,567.17. The Standard & Poor’s 500 index closed up 7.25 points, or 0.5percent, higher at 1,562.50.
Three stocks rose for every two that fell on the New York Stock Exchange. Consolidated volume was lower than usual, 2.9 billion shares.
The stock market was coming off its biggest weekly drop since November. Last week the S&P 500 and the Dow each lost 2.1 percent, paring their advances after a strong start to the year.
Traders appear more likely to punish companies that miss expectations, rather than reward companies that beat them, Goldman Sachs said. According to the investment bank’s research, while 63 percent of stocks that beat analysts’ forecasts last week performed better than the overall market the next day, 73 percent of those that missed targets performed worse.
In other trading, the Nasdaq composite gained the most of the three major indexes, rising 27.49 points, or 0.9 percent, to 3,233.55. Apple, which reports its earnings after the market close today, rose 2.1 percent, or $8.14, to $398.67. Apple is the biggest stock in the Nasdaq index with a 7.6 percent weighting.
In government bond trading, the yield on the 10-year Treasury note fell to 1.70 percent from 1.71 percent late Friday as traders shifted money into lower-risk assets.
Business, Pages 24 on 04/23/2013