Energy, transport stocks lift Wall Street, IBM drags

By Sinead Carew

A 7.6 percent slump in shares of IBM was the biggest single drag on the benchmark S&P 500 index, after the company reported profit margins that missed Wall Street expectations.

No. 3 U.S. railroad operator CSX Corp jumped 6.3 percent after topping profit estimates. The news lifted shares other railroads and powered a 2.3 percent jump in the Dow Jones Transport index <.DJT>.

"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.

He also cited the sharp decline in IBM's stock and a drop in financial stocks due to a flattening yield curve in U.S. treasuries.

"Earnings and the yield curve are the two biggest influences," he said, adding that "transports are very strong today which is a very good sign for the economy."

United Airlines gained 6.7 percent and lifted other airline stocks after reporting a better-than-expected quarterly profit, helped by higher fares.

At 2:47 p.m. ET, the Dow Jones Industrial Average <.DJI> fell 20.92 points, or 0.08 percent, to 24,765.71, the S&P 500 <.SPX> gained 6.78 points, or 0.25 percent, to 2,713.17 and the Nasdaq Composite <.IXIC> added 29.41 points, or 0.4 percent, to 7,310.51.

Trading was choppy with the Dow swinging between positive and negative territory. The S&P 500 briefly pared gains and the Dow added to losses around 2 p.m. ET after a Federal Reserve report said robust business borrowing, rising consumer spending, and tight labour markets indicated the U.S. economy is on track for continued growth, with trade war risks being the one big outlier.

Oil futures settled up 2.9 percent due to a decline in U.S. crude inventories and after sources signalled top exporter Saudi Arabia wants to see crude prices closer to $100 a barrel. The S&P energy sector <.SPSY> was up 2.3 percent. [O/R]

Earnings at the S&P 500 companies are estimated to grow 19.4 percent in the first quarter, the biggest increase in seven years, according to Thomson Reuters data.

"Even though it's early in the earnings season, what you're seeing is what folks were hoping - it is in line with expectations," said Thomas Martin, senior portfolio manager at GlobAlt Investments in Atlanta.

"The growth rate is coming in slightly higher as companies report above expectations, but it hasn't been super high."

Tesla rose 2.4 percent after a report that the company was aiming to ramp up production of Model 3 cars to reach its goal.

The CBOE Volatility index <.VIX> was up 0.16 points at 15.41, on track for its first daily increase after closing lower for six days in a row.

Lam Research fell 5.6 percent after the chip equipment maker kept its full-year shipment forecast unchanged, which analysts said could imply a slowdown in demand.

Other chip stocks including Applied Materials also fell, and the broader Philadelphia SE Semiconductor index <.SOX> was down 0.8 percent.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Bernadette Baum)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)