The stock market is fulfilling predictions of an uneasy trek through second-quarter earnings season.
Stocks ended a choppy day Monday with a moderate rebound that sent the Dow Jones industrial average up 56 points. Analysts said the advance was due in part to investors' regaining their optimism about earnings. But that change in sentment was fleeting: After the market closed, IBM reported revenue that fell short of expectations, and investors were back to selling in after-hours trading.
IBM Corp. did issue a more upbeat forecast for its 2010 earnings that in the past would have lifted stocks. But with investors increasingly on edge about signs of trouble in the economy, many decided not to share in IBM's more confident view of the future.
"The market is caught up by this fear factor over how much the economy has slowed and what does it mean in terms of future earnings growth," Peter Cardillo, chief market economist for Avalon Partners in New York, said before the market closed.
Stocks fell across a variety of industries in after-hours trading. IBM was hard hit, and investors also punished Texas Instruments Inc. after the chip maker matched but didn't surpass analysts' second-quarter revenue predictions.
Analysts have predicted that stock trading would be erratic throughout earnings season. Recent economic data has been disappointing, and investors are having a hard time trusting upbeat forecasts.
Stocks had fallen sharply Friday, taking the Dow down 261 points, after news of a drop in consumer confidence. That was a negative signal for the economy. Stocks also fell after big banks' earnings had investors doubting whether financial company profits would be curtailed in the future by new federal regulations.
Investors managed to weather some bad news early in the day Monday. The National Association of Home Builders said that its confidence index sank to 14, its lowest level since March 2009. A reading below 50 indicates homebuilders have a negative view of the housing market. The report was the latest in a series of disappointing housing numbers that began appearing after the government's homebuyer tax credit expired at the end of April.
Alan Gayle, senior investment strategist for RidgeWorth Investments, said Monday's market moves were in part a response to the announcement of better-than-expected orders for Boeing Co. at the Farnborough International Airshow in Britain. The aircraft maker announced orders at the Farnborough show, including a deal with Dubai-based airline Emirates worth $3.6 billion. Boeing also said GE Capital Aviation Services placed a $3 billion order.
Boeing's stock rose during regular trading, but it joined other stocks in falling in after-hours trading in response to IBM's revenue report.
The Dow rose 56.53, or 0.6 percent, to 10,154.43. The Standard & Poor's 500 index rose 6.37, or 0.6 percent, to 1,071.25, while the Nasdaq composite index, lifted by a rally in tech stocks, rose 19.18, or 0.9 percent, to 2,198.23.
Gainers outnumbered losers by 2 to 1 on the New York Stock Exchange. Volume was light, which can help exaggerate price moves. Consolidated volume came to 4.1 billion shares, down from Friday's 5.4 billion.
Hundreds of companies are still to report earnings in the next few weeks. On Tuesday, companies from a variety of industries are reporting their results, including Yahoo Inc., Apple Inc., Johnson & Johnson and PepsiCo. Inc. Goldman Sachs Group Inc., which last week settled civil fraud charges with the government, will also report its earnings.
Further readings on the housing market are due out later in the week. They too are expected to show the market is weak and that there are few signs that business will pick up anytime soon. Economists predict reports on housing starts, building permits and sales of previously occupied homes will show declines for June.
The building permits data is likely to be particularly discouraging because it is used as a gauge for future construction. Investors have become more concerned with forecasts for the future rather than past reports, so anything that indicates weakness in the coming months and quarters is being met with disappointment.
Housing stocks fell on the homebuilders' survey. D.R. Horton Inc. fell 13 cents to $9.97. Toll Bros. Inc. dropped 20 cents to $16.23, while Lennar Corp. fell 19 cents to $13.82.
IBM rose $1.76 to $129.79 in regular trading, lifted by investors' optimism. But it fell $5.29 in after-hours trading. Texas Instruments had gained 78 cents and closed at $25.55 in regular trading. It later fell $1.42.
Boeing rose $1.28 to $63.18 in regular trading, then retreated 57 cents after the market closed.
Investors were encouraged by Halliburton Co.'s earnings report and prospects for land-based business growth. The energy services company's stock jumped after it said a ban on offshore drilling would only cut earnings by 5 cents to 8 cents per share per quarter. Halliburton rose $1.66, or 6 percent, to $29.17.
At the same time, toy maker Hasbro Inc.'s earnings showed that shoppers are staying out of stores while unemployment remains high. Hasbro's earnings rose, but toy sales dropped adding to worries about the uncertain labor market and its effect on consumer spending. Hasbro fell 15 cents to $39.35.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.96 percent from 2.93 percent late Friday.
European markets all dipped. Moody's Investors Service cut its rating on Ireland's debt. Ratings agencies have regularly slashed ratings on many European countries' debt in recent months as mounting deficits dim the hopes for strong growth.
Britain's FTSE 100 fell 0.2 percent, while Germany's DAX dipped 0.5 percent and France's CAC-40 fell 0.4 percent.
Japan's Nikkei stock average fell 2.9 percent.