By Sue Chang, MarketWatch , Ryan Vlastelica
Mattel Inc. shares tank 16% in afternoon trade
The Dow Jones Industrial Average rose moderately while the S&P 500 and Nasdaq struggled on Thursday as investors turned more cautious after the blue-chip index tested an important psychological milestone in the previous session.
Wall Street has been mostly in a rally mode since the U.S. election in early November, with investors betting that President Donald Trump would an advocate for policies, including massive corporate tax cuts and deregulation, which would accelerate economic growth.
While the upside momentum has shown some signs of slowing of late, a round of positive corporate results on Wednesday gave credence to the idea that market levels were justified by economic fundamentals. That helped lift the Dow above 20,000 for the first time in its history (http://www.marketwatch.com/story/dow-stays-on-path-to-20000-milestone-ahead-of-key-earnings-2017-01-25). Although that level holds no fundamental or technical significance, it was seen as psychologically important, and closing above it could signify growing optimism.
Read: President Trump cheers Dow 20,000 as only he can (http://www.marketwatch.com/story/president-trump-cheers-dow-20000-as-only-he-can-2017-01-25)
The prevailing view among investors is that if earnings are upbeat, that is good. And even if results disappoint, they can look further into the future for the tax cuts and pro-growth policies promised by President Donald Trump, said Ian Winer, director of equity trading at Wedbush Securities.
"The market is in the mind-set now that heads I win, tails you lose," said Winer.
The Dow Jones Industrial Average rose 25 points, or 0.1%, to 20,094. The S&P 500 index shed 2 points, or less than 0.1%, to 2,296.01, after touching the round number of 2,300 intraday. Consumer-discretionary shares led S&P 500 sector gainers, led by a nearly 9% jump in Royal Caribbean Cruises Ltd. (RCL) and Charter Communications Inc.(CHTR), on news that Verizon Communications Inc.(VZ) is exploring acquiring the cable company (http://www.marketwatch.com/story/verizon-is-interested-in-a-charter-communications-combination-2017-01-26).
Meanwhile, the Nasdaq Composite Index slid less than point to 5,655.
"We may have gone too far too fast, but we're fairly valued, not over or under," said Mark Foster, chief investment officer at Kirr Marbach & Co., an investment advisory firm. "We need to see earnings come through, but we are starting to see that, and on top of that we have a new administration that is offering tax and regulatory relief, which is making people feel better about the market."
Of the 120 S&P 500 companies that have released quarterly results so far, 78% are beating earnings estimates by a median of 5% while 57% are beating revenue forecasts by an average of 3%, according to data from Fundstrat.
Read:This chart says the bull market has years left to go (http://www.marketwatch.com/story/this-chart-says-the-bull-market-has-years-left-to-go-2017-01-25)
News that President Enrique Peña Nieto of Mexico has canceled a summit (http://www.marketwatch.com/story/mexican-president-pena-nieto-cancels-meeting-with-trump-2017-01-26)scheduled for next week with President Trump hasn't impacted U.S. stocks although the Mexico peso slumped 1% (http://www.marketwatch.com/story/peso-slumps-after-mexican-president-cancels-meeting-with-trump-2017-01-26).
Economic news: In the latest economic data, the number of Americans who applied for unemployment benefits climbed by 22,000 to a one-month high of 259,000 (http://www.marketwatch.com/story/jobless-claims-jump-22000-to-259000-2017-01-26) in late January, but the level of layoffs remained extremely low.
There were no Federal Reserve speakers on tap as the central bank is in its so-called blackout period ahead of its policy-setting meeting on Jan. 31-Feb. 1.
Read:Dow hitting 20,000 is a reminder that it's the best active fund ever fashioned (http://www.marketwatch.com/story/the-dow-is-arguably-the-best-active-fund-ever-engineered-2016-12-22)
Stock movers: Shares of eBay Inc.(EBAY) jumped more than 5% after the e-commerce company late Wednesday reported solid earnings from its holiday quarter (http://www.marketwatch.com/story/ebay-jumps-after-earnings-gain-in-holiday-shopping-quarter-2017-01-25).
On a downbeat note, Qualcomm Inc.(QCOM) fell 5.5% after the chip maker late Wednesday issued a weak second-quarter (http://www.marketwatch.com/story/qualcomm-slides-on-weak-second-quarter-outlook-2017-01-25) outlook amid ongoing legal and regulatory challenges.
Royal Caribbean climbed after the company reported earnings that beat consensus and issued guidance above estimates (http://www.marketwatch.com/story/royal-caribbean-shares-rise-on-earnings-beat-strong-guidance-2017-01-26).
U.S.-listed shares of Diageo PLC(DEO) climbed 3.2% after the maker of Johnnie Walker whiskey and Smirnoff vodka said half-year profit rose to GBP1.51 billion ($1.9 billion).
Shares of Dow Chemical Co.(DOW) gained 1.9%. The chemicals giant posted adjusted earnings well ahead of forecasts (http://www.marketwatch.com/story/dow-chemical-swings-to-loss-on-charges-2017-01-26).
Ford Motor Co.(F) fell 3.1% after the car maker reported a loss of $800 million in the fourth quarter (http://www.marketwatch.com/story/ford-reports-q4-loss-and-forecasts-full-year-2017-to-be-generally-lower-2017-01-26).
Comcast Corp.(CMCSA) rose 2.5% following better-than-expected earnings.
Shares of Mattel Inc.(MAT), was tanking 16% after reported disappointing quarterly results late Wednesday.
Construction companies could be in focus a day after Trump issued an executive order to build a border wall with Mexico, saying construction could start within months (http://www.marketwatch.com/story/trump-in-abc-interview-wall-to-be-built-within-months-torture-absolutely-works-2017-01-25).
After the closing bell, Google parent Alphabet Inc (http://www.marketwatch.com/story/alphabet-earnings-google-may-shift-focus-to-cloud-as-search-business-slows-2017-01-25).(GOOGL) (GOOGL), Intel Corp (http://www.marketwatch.com/story/intel-earnings-holiday-pc-sales-could-save-the-quarter-2017-01-25).(INTC), Starbucks Corp (http://www.marketwatch.com/story/starbucks-earnings-us-same-store-sales-expected-to-be-key-driver-for-stock-price-2017-01-24).(SBUX) and MicrosoftCorp (http://www.marketwatch.com/story/microsft-earnings-expect-bigger-shift-to-cloud-as-azure-closes-in-on-aws-2017-01-25).(MSFT) are expected to release results.
Johnson & Johnson(JNJ) agreed to buy Actelion Pharmaceuticals Ltd (http://www.marketwatch.com/story/johnson-johnson-to-pay-30-billion-for-actelion-2017-01-26).(ATLN.EB), Europe's biggest biotech company, for $30 billion. Actelion shares jumped 20% in Zurich.
Other markets: Major Asian stock markets closed higher across the board (http://www.marketwatch.com/story/asian-stocks-lift-off-after-dow-20000-2017-01-25), boosted by optimism over the Dow average reaching 20,000.
Markets in Europe also rose (http://www.marketwatch.com/story/european-stocks-hang-at-1-year-high-buoyed-by-actelion-and-bank-shares-2017-01-26), helping the Stoxx Europe 600 index end at its highest close since December 2015.
Read:From unloved to favorite: Why European bank earnings are set to cheer investors (http://www.marketwatch.com/story/from-unloved-to-favorite-why-european-bank-earnings-will-cheer-investors-2017-01-25)
Oil prices rose more than 2%, while a stronger dollar (http://www.marketwatch.com/story/dollar-sticks-to-range-bound-trade-new-zealand-dollar-higher-2017-01-26) pressured gold .
--Sara Sjolin contributed to this article
(END) Dow Jones Newswires
January 26, 2017 13:06 ET (18:06 GMT)
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