US STOCKS-Wall St edges up after Washington deal; IBM drags

Thu Oct 17, 2013 11:47am EDT

* IBM, eBay earnings drag tech sector

* Goldman Sachs falls after earnings

* Verizon earnings boost lifts telecoms

* Indexes: Dow off 0.35 pct; S&P up 0.21 pct; Nasdaq up 0.28 pct

By Chuck Mikolajczak

NEW YORK, Oct 17 (Reuters) - U.S. stocks edged higher on Thursday as investors weighed the impact of an agreement by lawmakers in Washington to reopen the federal government and raise the U.S. debt ceiling, but disappointing earnings from IBM weighed on the Dow.

Congress on Wednesday approved an 11th-hour deal to end a partial government shutdown and pull the world's biggest economy back from the edge of default that could have brought about financial calamity.

"Today we are in a sigh of relief that we have averted the crisis, but longer term we haven't solved the problem," said Ron Florance, deputy chief investment officer at Wells Fargo Private Bank in Scottsdale, Arizona.

"Earnings are going to reflect the damage that was done, and if not the earnings, definitely the forward guidance."

The Dow was dragged lower by International Business Machines Corp's shares hitting a two-year low a day after reporting a 4 percent drop in third-quarter revenue, weaker than expected. The tech bellwether was also the worst performing stock on the S&P 500, trading down 6 percent to $175.58.

According to Thomson Reuters data through Thursday morning, of the 79 companies in the S&P 500 that have reported earnings, 64.6 percent have topped Wall Street expectations, above the 63 percent beat rate since 1994 but below the 66 percent average over the past four quarters.

On a revenue basis, 54.4 percent of companies in the S&P 500 have bested Wall Street estimates, below the 61 percent average since 2002 but above the 49 percent average for the past four quarters.

The Dow Jones industrial average fell 53.75 points or 0.35 percent, to 15,320.08, the S&P 500 gained 3.64 points or 0.21 percent, to 1,725.18 and the Nasdaq Composite added 10.733 points or 0.28 percent, to 3,850.164.

EBay Inc dropped 3.5 percent at $51.59 as the biggest drag on the Nasdaq 100 index after the company gave a disappointing holiday forecast on Wednesday, saying the U.S. economic environment had deteriorated partly because of the government shutdown. The S&P technology index declined 0.4 percent.

Goldman Sachs shares fell 2.3 percent to $158.45 after the fifth-largest U.S. bank by assets said its quarterly profit dropped amid weak bond-trading volumes.

But Verizon Communications Inc was a bright spot as shares rose 3.7 percent to $49.02 after the company posted stronger-than-expected third-quarter earnings and revenue. The S&P telecom index climbed 1.8 percent as the best performing of the ten major S&P sectors.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits dropped from a six-month high last week but remained elevated as California continued to deal with a backlog related to computer problems.

Other data showed the pace of manufacturing growth in the U.S. mid-Atlantic region slowed slightly in October, but firms' optimism about the future hit a 10-year high, a survey showed on Thursday.

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