Wall Street Ends Mostly Flat on Mixed Earnings

The stock market finished pretty much where it started on Wednesday as a mixed collection of earnings from big-name American companies left investors uninspired.

The Standard & Poor’s 500-stock index, the market’s most widely used indicator, ended just barely higher, by 0.01 point.

The Dow Jones industrial average slid 43.16 points, held back by big drops in Procter & Gamble and AT&T. P.& G. issued a weak quarterly profit forecast, and AT&T lost subscribers from its contract-based plans for the first time.

Investors are taking their cue from a heavy dose of earnings this week.

Procter & Gamble, the maker of Tide detergent and Gillette razors, dropped $4.82, or 5.9 percent, to $77.12 after its profit forecast came in below analysts’ expectations.

AT&T dropped $1.96, or 5 percent, to $37.04 after it lost phone subscribers from its contract-based plans in its latest quarter, in a sign that industry growth was slowing now that most Americans have smartphones.

But the mood on Wall Street was tempered by Boeing and General Dynamics, which reported strong quarterly profits.

Boeing, a Dow component, climbed $2.65, or 3 percent, to $90.83 after the airplane maker said its first-quarter net income rose 20 percent despite problems with the 787 Dreamliner. The company said it would still meet its financial and delivery targets this year.

General Dynamics, the aerospace and military contractor, surged $4.63, or 6.9 percent, to $71.73 after posting a profit that was better than expected.

So far, 175 of the companies in the S.& P. 500, or 35 percent, have reported quarterly earnings. Two-thirds of the Dow’s members have reported. While the majority have delivered better-than-expected profits, their sales have not been as strong, suggesting they were struggling to grow.

Sixty-nine percent of companies in the S.& P. 500 have beaten earnings expectations, better than the 10-year average of 62 percent, according to S&P Capital IQ. But only 39 percent have beaten revenue forecasts.

Looking ahead, the outlook dims. Of the 35 companies that have given earnings forecasts for the second quarter, 28 are negative, according to S&P Capital IQ, with only four positive and three in-line.

“We think that most managements are appropriately cautious in their outlooks, because it’s very possible that the second quarter will continue to slow,” said Jim Russell, a regional investment director at U.S. Bank.

The Dow closed down 0.3 percent, at 14,676.30. The S.& P. 500 index was up 0.01 point, to 1,578.79.

The Nasdaq composite edged up 0.32 point to 3,269.65.

The market’s gains in April have slowed sharply after a first-quarter surge pushed both the Dow and the S.& P. 500 to nominal highs.

The Dow is up just 0.7 percent this month while the S.& P. 500 has gained 0.6 percent.

During the first three months of the year, the Dow and the S.& P. 500 averaged monthly gains of more than 3 percent, driven by optimism that the housing and job markets were recovering and that company earnings would continue to climb.

Companies are still making money in the first quarter, however, and are on track to increase their earnings by an average of almost 3 percent, according to S&P Capital IQ.

“Over all, I’m really quite comforted,” said David Kelly, chief global strategist at JPMorgan Funds. “It’s not an easy environment in which to make money, but companies are finding ways in which to hold costs in line and grow earnings.”

In the bond market, the price of the Treasury’s 10-year note rose
1/32, to 102 22/32, while its yield slipped to 1.70 percent, from 1.71 percent late Tuesday.

This article has been revised to reflect the following correction:

Correction: April 24, 2013

Because of an editing error, an earlier version of this article misstated the day's trend in the Nasdaq composite index. It closed up, not down, by 0.01 percent.

DealBook: Barclays and Credit Suisse Post Strong Earnings in Investment Banks

Darren Staples/ReutersBarclays’ investment bank benefited partly from a bullish stock market performance in America.

LONDON — As European policy makers push financial institutions to cut back on their risky trading activity, some of the region’s largest banks are becoming more reliant on their investment banking operations to bolster performance.

On Wednesday, the British bank Barclays and a Swiss rival, Credit Suisse, both reported strong first-quarter earnings for their investment banks that helped to offset some sluggish growth in other divisions like retail banking and wealth management.

The healthy performance comes despite a push by European politicians to limit firms’ exposure to financial risks and to promote lending to local economies.

New tougher capital requirements have forced European banks to shed billions of dollars of assets since the financial crisis began. A proposed cap on banker bonuses that will become effective at European institutions next year has led to fears of a mass exodus of firms’ top earners to international competitors.

The two banks’ first-quarter earnings reflected the strength of investment banking.

Barclays’ quarterly pretax profit for its investment bank rose 11 percent, to £1.3 billion, or $2 billion, or roughly 74 percent of the company’s combined pretax profit over the period.

Over all, Barclays’ quarterly profit, when adjusted for one-time charges, was £1.8 billion, down 25 percent from the same period last year, which missed analysts’ estimates. The fall was linked to £514 million ($784 million) of costs related to a restructuring that includes 3,800 layoffs and a £235 million ($359 million) charge connected to the value of the bank’s debt.

Barclays’ investment bank benefited from renewed deal activity and a bullish stock market performance in the United States, where it now generates around 50 percent of its revenue. For example, the bank is advising Dish Network on its proposed $25.5 billion takeover of Sprint Nextel. “The reality is that investment banking is becoming more dominant for Barclays,” said Ian Gordon, a banking analyst at Investec in London. “The first quarter was a blowout performance.”

At Credit Suisse, pretax profit in its investment banking division rose 43 percent, to 1.3 billion Swiss francs, or $1.4 billion, partly driven by a strong performance in the bank’s fixed-income sales and trading business. In contrast, earnings from the company’s private banking and wealth management business fell 7 percent, to 881 million francs, over the same period.

Credit Suisse reported a net profit of 1.3 billion francs ($1.4 billion) in the first quarter, compared with a profit of 44 million francs ($47 million) in the same period last year, when the bank booked a loss of 1.6 billion francs ($1.7 billion) on the value of its own outstanding debt.

Analysts said the bank’s strong earnings were a result of a cost-cutting program started by the chief executive, Brady W. Dougan. The company’s investment banking division also benefited from a pickup in global stock markets in the first three months of the year.

“The investment bank was the main driver with impressive cost management,” Kian Abouhossein, a banking analyst at JPMorgan Chase in London, said in a research note to investors.

Shares in Barclays fell 1.3 percent in London on Wednesday, while Credit Suisse’s stock price rose 1.5 percent in Zurich.

Attention will now turn to other large European banks that will report their first-quarter earnings over the next few weeks.

Deutsche Bank, the largest bank in Germany and one with a major investment banking division, will announce its results on Tuesday, as will the Swiss banking giant UBS. Analysts are expecting a fall in UBS’s first-quarter net profit as the company continues to carry out sharp reduction in its investment bank, which includes around 10,000 job cuts, to focus on its wealth management business.

The continued reliance on investment banking at some of Europe’s largest institutions follows efforts by politicians and top banking executives to reshape the Continent’s financial sector.

Some banks, like UBS and Royal Bank of Scotland, are reducing their exposure to risky trading assets, while others, like HSBC and Standard Chartered, are increasing their operations in fast-growing emerging markets.

Antony P. Jenkins, Barclays’ chief executive, also is trying to rehabilitate the company’s image after a series of recent scandals. Last year, the bank agreed to a $450 million settlement with the United States and British authorities after some of its traders were found to have manipulated crucial global benchmark rates for financial gains.

DealBook: Barclays and Credit Suisse Post Strong Earnings in Investment Banks

Darren Staples/ReutersBarclays’ investment bank benefited partly from a bullish stock market performance in America.

LONDON — As European policy makers push financial institutions to cut back on their risky trading activity, some of the region’s largest banks are becoming more reliant on their investment banking operations to bolster performance.

On Wednesday, the British bank Barclays and a Swiss rival, Credit Suisse, both reported strong first-quarter earnings for their investment banks that helped to offset some sluggish growth in other divisions like retail banking and wealth management.

The healthy performance comes despite a push by European politicians to limit firms’ exposure to financial risks and to promote lending to local economies.

New tougher capital requirements have forced European banks to shed billions of dollars of assets since the financial crisis began. A proposed cap on banker bonuses that will become effective at European institutions next year has led to fears of a mass exodus of firms’ top earners to international competitors.

The two banks’ first-quarter earnings reflected the strength of investment banking.

Barclays’ quarterly pretax profit for its investment bank rose 11 percent, to £1.3 billion, or $2 billion, or roughly 74 percent of the company’s combined pretax profit over the period.

Over all, Barclays’ quarterly profit, when adjusted for one-time charges, was £1.8 billion, down 25 percent from the same period last year, which missed analysts’ estimates. The fall was linked to £514 million ($784 million) of costs related to a restructuring that includes 3,800 layoffs and a £235 million ($359 million) charge connected to the value of the bank’s debt.

Barclays’ investment bank benefited from renewed deal activity and a bullish stock market performance in the United States, where it now generates around 50 percent of its revenue. For example, the bank is advising Dish Network on its proposed $25.5 billion takeover of Sprint Nextel. “The reality is that investment banking is becoming more dominant for Barclays,” said Ian Gordon, a banking analyst at Investec in London. “The first quarter was a blowout performance.”

At Credit Suisse, pretax profit in its investment banking division rose 43 percent, to 1.3 billion Swiss francs, or $1.4 billion, partly driven by a strong performance in the bank’s fixed-income sales and trading business. In contrast, earnings from the company’s private banking and wealth management business fell 7 percent, to 881 million francs, over the same period.

Credit Suisse reported a net profit of 1.3 billion francs ($1.4 billion) in the first quarter, compared with a profit of 44 million francs ($47 million) in the same period last year, when the bank booked a loss of 1.6 billion francs ($1.7 billion) on the value of its own outstanding debt.

Analysts said the bank’s strong earnings were a result of a cost-cutting program started by the chief executive, Brady W. Dougan. The company’s investment banking division also benefited from a pickup in global stock markets in the first three months of the year.

“The investment bank was the main driver with impressive cost management,” Kian Abouhossein, a banking analyst at JPMorgan Chase in London, said in a research note to investors.

Shares in Barclays fell 1.3 percent in London on Wednesday, while Credit Suisse’s stock price rose 1.5 percent in Zurich.

Attention will now turn to other large European banks that will report their first-quarter earnings over the next few weeks.

Deutsche Bank, the largest bank in Germany and one with a major investment banking division, will announce its results on Tuesday, as will the Swiss banking giant UBS. Analysts are expecting a fall in UBS’s first-quarter net profit as the company continues to carry out sharp reduction in its investment bank, which includes around 10,000 job cuts, to focus on its wealth management business.

The continued reliance on investment banking at some of Europe’s largest institutions follows efforts by politicians and top banking executives to reshape the Continent’s financial sector.

Some banks, like UBS and Royal Bank of Scotland, are reducing their exposure to risky trading assets, while others, like HSBC and Standard Chartered, are increasing their operations in fast-growing emerging markets.

Antony P. Jenkins, Barclays’ chief executive, also is trying to rehabilitate the company’s image after a series of recent scandals. Last year, the bank agreed to a $450 million settlement with the United States and British authorities after some of its traders were found to have manipulated crucial global benchmark rates for financial gains.

Wall Street Ends Mostly Flat on Mixed Earnings

The stock market finished pretty much where it started on Wednesday as a mixed collection of earnings from big-name American companies left investors uninspired.

The Standard & Poor’s 500-stock index, the market’s most widely used indicator, ended just barely higher, by 0.01 point.

The Dow Jones industrial average slid 43.16 points, held back by big drops in Procter & Gamble and AT&T. P.& G. issued a weak quarterly profit forecast, and AT&T lost subscribers from its contract-based plans for the first time.

Investors are taking their cue from a heavy dose of earnings this week.

Procter & Gamble, the maker of Tide detergent and Gillette razors, dropped $4.82, or 5.9 percent, to $77.12 after its profit forecast came in below analysts’ expectations.

AT&T dropped $1.96, or 5 percent, to $37.04 after it lost phone subscribers from its contract-based plans in its latest quarter, in a sign that industry growth was slowing now that most Americans have smartphones.

But the mood on Wall Street was tempered by Boeing and General Dynamics, which reported strong quarterly profits.

Boeing, a Dow component, climbed $2.65, or 3 percent, to $90.83 after the airplane maker said its first-quarter net income rose 20 percent despite problems with the 787 Dreamliner. The company said it would still meet its financial and delivery targets this year.

General Dynamics, the aerospace and military contractor, surged $4.63, or 6.9 percent, to $71.73 after posting a profit that was better than expected.

So far, 175 of the companies in the S.& P. 500, or 35 percent, have reported quarterly earnings. Two-thirds of the Dow’s members have reported. While the majority have delivered better-than-expected profits, their sales have not been as strong, suggesting they were struggling to grow.

Sixty-nine percent of companies in the S.& P. 500 have beaten earnings expectations, better than the 10-year average of 62 percent, according to S&P Capital IQ. But only 39 percent have beaten revenue forecasts.

Looking ahead, the outlook dims. Of the 35 companies that have given earnings forecasts for the second quarter, 28 are negative, according to S&P Capital IQ, with only four positive and three in-line.

“We think that most managements are appropriately cautious in their outlooks, because it’s very possible that the second quarter will continue to slow,” said Jim Russell, a regional investment director at U.S. Bank.

The Dow closed down 0.3 percent, at 14,676.30. The S.& P. 500 index was up 0.01 point, to 1,578.79.

The Nasdaq composite edged up 0.32 point to 3,269.65.

The market’s gains in April have slowed sharply after a first-quarter surge pushed both the Dow and the S.& P. 500 to nominal highs.

The Dow is up just 0.7 percent this month while the S.& P. 500 has gained 0.6 percent.

During the first three months of the year, the Dow and the S.& P. 500 averaged monthly gains of more than 3 percent, driven by optimism that the housing and job markets were recovering and that company earnings would continue to climb.

Companies are still making money in the first quarter, however, and are on track to increase their earnings by an average of almost 3 percent, according to S&P Capital IQ.

“Over all, I’m really quite comforted,” said David Kelly, chief global strategist at JPMorgan Funds. “It’s not an easy environment in which to make money, but companies are finding ways in which to hold costs in line and grow earnings.”

In the bond market, the price of the Treasury’s 10-year note rose
1/32, to 102 22/32, while its yield slipped to 1.70 percent, from 1.71 percent late Tuesday.

This article has been revised to reflect the following correction:

Correction: April 24, 2013

Because of an editing error, an earlier version of this article misstated the day's trend in the Nasdaq composite index. It closed up, not down, by 0.01 percent.