Blue-Chips Climb to Record High on Earnings Optimism

U.S. blue-chip stocks closed at a record high Tuesday on optimism about the earnings reporting season under way, while the broader market ended little changed as gains were offset by a sharp drop in oil prices that hurt energy shares.

The Dow Jones industrial average was up 26.51 points, or 0.21 percent, to end at 12,582.59, the 25th record close for the blue-chip average since the start of October. The Standard & Poor's 500 Index gained 1.17 points, or 0.08 percent, to finish at 1,431.90. But the Nasdaq Composite Index slipped 5.04 points, or 0.20 percent, to close at 2,497.78.

The most anticipated news of the day came after the closing bell, when tech bellwether Intel Corp. (INTC) reported its quarterly earnings. Shares of the world's biggest microchip maker were slightly lower in extended-hours trading, which analysts and fund managers blamed on a disappointing gross margin forecast.

On the earnings front, Wells Fargo & Co. (WFC), the No. 5 U.S. bank, rose after it said fourth-quarter profit increased 13 percent, helped by growth in business lending, low-cost deposits and subprime mortgages.

The 3.4 percent slide in crude futures prices weighed on oil companies like Exxon Mobil Corp. (XOM), but the prospect of lower energy costs helped other sectors. Transportation stocks, in particular, were sharply higher, sending the Dow Jones Transportation Average up 2.1 percent.

"The energy sector is what's holding the S&P flat, but seven of the other nine sectors are positive," said John Augustine, chief investment strategist at Fifth Third Asset Management in Cincinnati. "We're just waiting to see what the outcome of earnings is going to be."

Trading was moderate on the New York Stock Exchange, with about 1.51 billion shares changing hands, below last year's estimated daily average of 1.84 billion, while on Nasdaq, about 2.24 billion shares traded, above last year's daily average of 2.02 billion.

The number of declining stocks versus advancing ones was equal on the NYSE. Decliners beat gainers by a ratio of 8 to 7 on the Nasdaq.

Wells Fargo rose 2 percent, or 72 cents, to $36.21 on the NYSE, making it the biggest positive driver in the S&P 500.


Shares of Symantec Corp. were the biggest drag on the Nasdaq after the security software maker warned of disappointing results and cut its full-year outlook.

Another heavy drag on both the Nasdaq 100 and the S&P 500 was shares of Cisco Systems Inc.. Prudential cut its rating on the network equipment maker to "neutral weight" from "overweight."

Symantec's stock lost 13.1 percent, or $2.69, to $17.79 while Cisco's (CSCO) shares fell 3 percent, or 88 cents, to $28.04.

In regular trading, Intel's stock rose 0.8 percent, or 17 cents, to $22.30 on the Nasdaq. But after the bell, the stock fell 3.4 percent to $21.55 following its earnings release. Intel's earnings beat Wall Street's expectations, but its forecast on gross margins was weaker than expected.


In addition to the relief on oil prices, transportation shares got a boost from a JP Morgan ratings upgrade of FedEx to "overweight." Citigroup also lifted its price target on JetBlue Airways , Southwest Airlines , AMR Corp. .

FedEx shares gained 2.6 percent, or $2.82, to $111.68, while Southwest shares rose 2.2 percent, or 35 cents, to $16.57, both on the Big Board. AMR's stock jumped 7.1 percent, or $2.67, to $40.23 on the NYSE and JetBlue was up 0.3 percent, or 5 cents, at $16.62 on the Nasdaq.

Shares of Exxon Mobil fell 1.4 percent, or $1.03, to $71.63. ConocoPhillips stock lost 1.6 percent, or $1.02, to $62.81.

U.S. crude for February delivery fell $1.78 to settle at $51.21 a barrel, after hitting a session low at $50.55 on the New York Mercantile Exchange.