Wall Street Mulls Bank Results; Apple Rebounds

A rebound for Apple Inc. buoyed the technology sector on Wednesday, while Wall Street adopted a generally wary stance in considering results from several banks including J.P. Morgan Chase & Co. and Goldman Sachs Group Inc.

“We’re meandering along on relatively low volume, digesting some of the gains and waiting to see what’s next,” said Brad Sorensen, director of market and sector research at Charles Schwab.

With fourth-quarter earnings reported by just 29 of the S&P 500 companies, it’s too soon to make broad generalizations about how the season will fare overall. Yet “every early earnings comparison appears more favorable, on balance, than during the third quarter of 2012,” Stuart Freeman, chief equity strategist, and Scott Wren, senior equity strategist, at Wells Fargo Advisors, wrote in an emailed note.

“Energy, utilities and telecom services earnings could show stronger year-to-year earnings growth rates versus negative ones in third quarter 2012,” wrote Freeman and Wren, who added they were sticking with their $103 estimate for the 2012 calendar year, adding that it’s possible “the quarter could come in a little softer than our estimate.” For 2013, the Wells Fargo analysts said they continued to carry a $108 operating earnings estimate.

The Dow Jones Industrial Average fell 23.66 points, or 0.2%, to 13,511.23, with 16 of its 30 components losing ground.

Boeing Co. led the blue-chip slide, its shares down 3.4%, after Japan’s two largest airlines grounded all their 787 Dreamliner planes as a safety precaution after one made an emergency landing. Wednesday’s incident is the latest in a series of mishaps plaguing the airliner in recent weeks.

The S&P 500 index added less than half a point to 1,472.63, with telecommunications hit the hardest and the recently beaten-up technology sector the best performer of its 10 major industry groups.

Apple’s recent drop helped pull the tech sector down, giving investors the opportunity to buy into one of what Charles Schwab’s Sorensen considers the better investment ideas for 2013.

Sorensen expects corporations to increase expenditure on technology to increase production. “Rather than add to payrolls, corporations would rather invest in technology, and companies have been hoarding cash for the past few years, plus there is plenty of cash and financing available,” he reasons.

The Nasdaq Composite Index rose 6.77 points, or 0.2%, to 3,117.54.

For every seven shares rising more than eight fell on the New York Stock Exchange, where nearly 560 million shares traded.

Composite volume approached 3.2 billion.

Sidelined

Investors are “back to the sidelines waiting to get a decent read on fourth-quarter earnings and, more important, first-quarter 2013 revenue and earnings guidance,” said Fred Dickson, chief investment strategist at Davidson Cos.

Shares of J.P. Morgan Chase rose 1% after the bank reported fourth-quarter profit that exceeded estimates and 2012 revenue down from the prior year.

Goldman Sachs climbed 4.1% as the investment bank’s quarterly profit nearly tripled

“Financials have outperformed recently, and earnings have not dissuaded that. Balance sheets are improving, especially among the big banks, which can continue to grow revenues and meet estimates,” said Sorensen at Charles Schwab.

In economic news, the Federal Reserve reported Wednesday that U.S. industrial production rose for a second month in December on increased demand for business equipment.

In a separate release Wednesday afternoon, the Fed’s Beige Book survey from its 12 districts found increased economic activity in December, with rising home and car sales cited as factors.

And the Labor Department found consumer prices for U.S. goods and services held flat in December, with prices rising 1.7% for all of 2012.

On Tuesday, the World Bank sharply curtailed its forecast for global growth in 2013, warning of the negative impact of the political battle in the U.S. over spending cuts and raising the nation’s debt limit.

Marketwatch