* Sept housing starts surge, buoying homebuilders' stocks
* Intel and IBM slump after results, weigh on Dow
* Bank of America shares volatile in heavy trading
* Dow up 0.04 pct, S&P up 0.4 pct, Nasdaq up 0.1 pct
By Atossa Araxia Abrahamian
NEW YORK, Oct 17 The S&P 500 rose for the third
consecutive day on Wednesday after housing starts hit a
four-year high, but the Dow was weighed down by IBM after it
posted weak revenue.
Homebuilders' shares led gains after the Commerce Department
said groundbreaking on new homes jumped 15 percent in September,
the quickest pace since July 2008. The surge in housing starts
was viewed as evidence that the housing sector's fledgling
recovery is bolstering the recovery of the broader economy.
The PHLX Housing Index rose 2.9 percent.
International Business Machines Corp was a notable
disappointment after the company said revenue fell short of
expectations. The stock dropped 4.9 percent, exerting an
81-point drag on the Dow industrials. IBM has an outsized
influence on the Dow, which is a price-weighted index. IBM's
stock closed at $200.63.
Intel Corp, the world's largest chipmaker, lost 2.5
percent to end at $21.79 a day after giving a weak revenue
outlook. The S&P technology sector index slid 0.8
percent and ranked as the only loser among the S&P 500's 10
industry sectors on Wednesday.
Although it's still early in the earnings season, the
results have been a bit better than anticipated. Fourteen
percent of S&P 500 companies have already reported earnings, and
of those companies, 65 percent have beaten analysts'
expectations, ahead of the long-term average of 62 percent.
"The results are just not that bad at all. And whenever
people begin to get too far in one direction - meaning earnings
are going to be terrible - generally reality is better than
that, and we are seeing that now," said Tim Ghriskey, chief
investment officer of Solaris Group in Bedford Hills, New York.
According to Thomson Reuters data through Wednesday
afternoon, quarterly earnings for S&P 500 components are now
expected to fall 1.7 percent from a year ago, a modest
improvement in expectations from a forecast for a drop of 2.3
percent earlier in the week.
Bank of America shares fell 0.2 percent to $9.44
after the second-largest U.S. bank reported that it earned just
$340 million during the quarter, down 95 percent from the
year-ago period. The bank also said it had provided $4.75
billion in first lien principal reductions and expected to meet
total obligations within the first year of the National Mortgage
"For the financials, the bar was set very low. They topped
the bar, but we didn't get a nice tailwind from
post-announcement conference calls," said Fred Dickson, chief
market strategist at D.A. Davidson & Co., in Lake Oswego,
The Dow Jones industrial average rose 5.22 points, or
0.04 percent, to 13,557 at the close. The Standard & Poor's 500
Index gained 5.99 points, or 0.41 percent, to finish at
1,460.91. The Nasdaq Composite Index advanced 2.95
points, or 0.10 percent, to close at 3,104.12.
Over the past three days, the S&P 500 has gained 2.3 percent
- its best three-day advance in more than a month. The benchmark
index is now just 0.33 percent off its 2012 closing high.
After the bell, shares of Ebay slipped 0.5 percent
to $47.95 following the release of its results. The stock ended
the regular session at $48.20, off just 0.08 percent.
Shares of American Express fell 0.6 percent to $59
after the bell after the company said third-quarter profit rose
only marginally as cardmembers reined in their spending.
American Express, a Dow component, closed on
Wednesday at $59.37, up 1.3 percent in regular trading.
Among Wednesday's biggest losers during the regular session
was Apollo Group Inc, which plunged 22.2 percent to
close at an 11-year low of $21.40. Shares of Apollo, the owner
of the University of Phoenix, the largest U.S. for-profit
college, fell after the company forecast a weak 2013 and
announced new student sign-ups fell 14 percent for the fourth
quarter ended Aug. 31.
Apollo said it would save $300 million by fiscal year 2014
by cutting jobs and shutting half of its University of Phoenix
ASML, the world's leading chip gear maker, agreed
to buy Cymer - its key supplier of a light-based
technology crucial to making a new generation of much smaller
and smarter chips - for $2.5 billion. Cymer's stock soared 49.4
percent to $71.45. In contrast, the U.S.-listed shares of ASML
dropped 6.5 percent to $50.08.
Volume was roughly 6.3 billion shares traded on the New York
Stock Exchange, the Nasdaq and the NYSE MKT, compared with the
year-to-date average daily closing volume of 6.51 billion.
Advancers outnumbered decliners on the NYSE by a ratio of
more than 2 to 1. On the Nasdaq, five stocks rose for every
three that fell.