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Citi boosts Wall St; IBM, Apple slide after close

Citi boosts Wall St; IBM, Apple slide after close
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First Published: Tue, Oct 19 2010. 09 33 AM IST
Updated: Tue, Oct 19 2010. 09 33 AM IST
New York: US stocks advanced on Monday as stronger-than-expected profit from Citigroup helped financial shares shake off worries that the foreclosure mess could threaten the stability of the housing market.
Apple Inc, which hit an all-time high during the regular session, disappointed investors after reporting gross margins and iPad shipments. Its shares skidded 5% in after-hours trading while stock index futures fell, suggesting a weak market opening on Tuesday.
Shares in IBM also fell after the closing bell, losing 3.5% to $137.84. The stock had reached a 52-week high during the regular session. International Business Machines Corp reported a higher-than-expected profit and raised its outlook for the full year, but the shares fell on sluggish sales of technology services..
“Both stocks have kind of gone parabolic into the earnings,” said Nick Kalivas, an analyst at MF Global in Chicago. “My fear is we’re going to get a buy the rumor, sell the fact trade.”
In regular trading, Citigroup gained 5.6% to $4.17 after it reported its third consecutive quarterly profit. Last week JPMorgan Chase and Co’s profits beat estimates. The KBW Bank index rose 3%, recovering some of the losses banks had in the last few days.
The Dow Jones industrial average rose 80.91 points, or 0.73%, at 11,143.69. The Standard & Poor’s 500 Index gained 8.52 points, or 0.72%, at 1,184.71. The Nasdaq Composite Index added 11.89 points, or 0.48%, at 2,480.66.
Citigroup said it is looking at the home loans it bundled into bonds and sold to investors. So far, it has not found any problems.
The largest US bank, Bank of America, reports earnings on Tuesday. Bank of America’s shares rose 3% to $12.40.
Before the close on Monday, around 10% of S&P 500 companies had reported earnings, with 84% of those beating expectations, according to data compiled by Thomson Reuters.
Apple shares hit a life high at $319 during the day as analysts expected fourth-quarter earnings to showcase Apple’s powerful one-two punch of the iPhone and the iPad.
Apple’s shares closed up 0.4% to $315.79, then fell in extended-hours trading to $301.79. Traders in Apple’s options were pricing in a potential post-earnings swing of about 7.5%.
Shares of IBM rose 1.3% to $142.83 and were the top boost to the Dow industrials before the company’s earnings report.
Northeast Utilities will buy NSTAR in a $4.2 billion all-stock deal to create one of the largest U.S. utilities, the companies said. Shares in both companies fell, with Northeast down 0.9% to $30.42 and NSTAR off 0.6% to $39.30.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 2 to 1. The ratio was about the same on the Nasdaq.
About 7.66 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq -- below the year’s average so far of about 8.77 billion.
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First Published: Tue, Oct 19 2010. 09 33 AM IST
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