Goldman results limit market gains

ENCOURAGING results from health care and materials companies lifted US stocks yesterday, but weak earnings from Goldman Sachs limited gains in a market skeptical of the growth outlook.

Investors were reluctant to make big bets as the market readied for a spate of high-profile earnings. Volume was extremely low, with 6.56bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47bn.

Johnson & Johnson was one of the first major names to rally following results this season, rising 3.7 per cent to $62.69 after it raised its profit outlook.

Offsetting that was Goldman Sachs Group, which fell 1.2 per cent to $151.89 after posting a steep profit drop as trading revenue fell, the latest in a number of underwhelming reports from banks. The investment bank also warned that there were fewer opportunities to make money in the current environment.

“Unless the performance of financials and tech stocks improves, then I think the market could be in store for a correction,” said Marshall Front, chairman and chief investment officer of Front Barnett Associates in Chicago. “These are important groups that point towards future economic activity.”

The S&P Financial Index is down 3.8 per cent from a recent high reached on April 7, while the S&P Information Technology Index is down 2 per cent over the same period.

Materials were the S&P’s top percentage gainers a day after Steel Dynamics forecast strong growth, lifting other steelmakers. The stock rose 5.7 per cent to $18.46 while US Steel climbed 4.5 per cent to $52.74. The S&P Materials Index rose 1.8 per cent.

The Dow Jones industrial average gained 65.16 points, or 0.53 per cent, to 12,266.75 at the close. The Standard & Poor’s 500 Index added 7.48 points, or 0.57 per cent, to 1,312.62. The Nasdaq Composite Index advanced 9.59 points, or 0.35 per cent, to 2,744.97.

The market seemed to have moved past Monday’s surprising announcement that Standard & Poor’s was revising its outlook downward on the United States credit rating.

“People are acknowledging that it is still very unlikely that there could be a downgrade of the US, but still there are a lot of concerns about what could happen with all these government debt problems,” said Charles Bobrinskoy, vice chairman of Ariel Investments in Chicago