* IBM, Coach fall after earnings
* 26 companies scheduled to report on Wednesday
* El-Erian to step down from Pimco
* Indexes: Dow off 0.2, S&P up 0.06 pct, Nasdaq up 0.2 pct
By Chuck Mikolajczak
NEW YORK, Jan 22 U.S. stocks were flat on
Wednesday, as the latest mixed bag of corporate earnings failed
to give investors confidence to push equities higher after a
strong rally last year.
IBM shares lost 3.3 percent to $182.24 and were the
biggest drag on both the Dow and S&P 500 indexes. The world's
biggest technology services company missed revenue expectations
for a fourth straight quarter amid weakening demand,
particularly in growth markets like China.
But fellow Dow component United Technologies Corp
was a bright spot, up 0.9 percent to $116.01 to help curb
declines on the blue-chip index. The world's largest maker of
elevators and air conditioners reported fourth-quarter profit
that topped Wall Street estimates, although revenue fell shy of
Norfolk Southern Corp jumped 6.4 percent to $94.39
as one of the best performers on the S&P 500. The railroad
posted a 24 percent rise in quarterly income that beat Wall
Street expectations. The gains helped lift the Dow Jones
Transportation average to a record high.
Coach Inc tumbled 6 percent to $49.38, making it the
worst performer on the S&P 500 after it said sales in North
America fell further in the final quarter of 2013, as it lost
share in the handbag business to fast-growing
"There has been little so far to excite the masses and it is
going to lead many to question, can this market hang in there
with a flat earnings environment," said Andre Bakhos, managing
director at Janlyn Capital LLC in Bernardsville, New Jersey.
"It will be easier to unnerve a market with less earnings
confidence, and you are seeing companies like IBM and Coach that
have come out and leave the investor looking for something
substantial to bite into."
The Dow Jones industrial average fell 30.35 points or
0.18 percent, to 16,384.09, the S&P 500 gained 1.05
points or 0.06 percent, to 1,844.85 and the Nasdaq Composite
added 9.179 points or 0.22 percent, to 4,234.939.
After a 29.6 percent jump in the S&P 500 in 2013, the S&P
has edged down 0.2 percent so far in 2014 as investors look to
corporate profits for evidence of growth as the Federal Reserve
has begun to wind down its market-friendly economic stimulus.
About eight companies have issued negative outlooks for
every positive one, which would mark the lowest ratio on record
should it continue.
According to Thomson Reuters data, earnings for the fourth
quarter are expected to grow 7.1 percent over the prior year. Of
the 65 companies in the benchmark S&P index reporting through
Tuesday, about 58 percent topped analyst expectations, below the
long-term average of 63 percent. About 71 percent have topped
revenue forecasts, above the long-term average of 61 percent.
Advanced Micro Devices Inc slumped 10.8 percent to
$3.72. The chipmaker forecast a steeper-than-expected fall in
current quarter revenue, saying sales of gaming consoles were
not growing fast enough to offset slowing PC sales.
After the closing bell, earnings are expected from eBay Inc
, Netflix Inc, Varian Medical Systems Inc
and F5 Networks Inc. A total of 26 S&P 500
companies are scheduled to report earnings on Wednesday.
Merger and acquisition activity continued at a brisk pace,
as companies flush with cash look for ways to create growth.
Cloud software maker VMWare Inc said it would buy
privately-held mobile security company AirWatch, in a deal
valued at about $1.54 billion, to tap into rising demand for
software security, sending its shares up 2.1 percent to $99.37.
Mohamed El-Erian, heir apparent to Pimco co-founder Bill
Gross, will step down as chief executive and co-chief investment
officer, raising questions about the future course of the
world's largest bond fund manager.