Stocks turn positive as Intel earnings, outlook overshadow disappointing retail sales report

Stocks rise modestly on strong Intel earnings

NEW YORK — Stocks rose modestly Wednesday as Intel’s strong earnings and outlook encouraged investors to set aside their disappointment over a weak retail sales report.

The Dow Jones industrial average rose 9 points, putting the index in line to extend its six-day winning streak. The tech-heavy Nasdaq composite rose a sharp 13 points in response to Intel Corp.’s results.

Intel reported its biggest quarterly profit in a decade as large corporations started buying new computers for employees. Companies have been reluctant to upgrade technology during the recession, so a return of spending could be a sign corporations are ready to start expanding their businesses again and hire new workers.

Intel’s profit and outlook, which surpassed analysts’ forecasts, are considered good signs for the economy because the chipmaker manufactures 80 percent of the processors that run PCs and has a large global reach.

Intel, which released its results after trading ended Tuesday, jumped 3.6 percent. Other chipmakers, including Advanced Micro Devices Inc., followed Intel higher.

The excitement over Intel’s profit forecast was tempered by a report showing shoppers cut back on spending for the second straight month.

The Commerce Department said June retail sales fell 0.5 percent. That’s worse than the 0.2 percent decline forecast by economists polled by Thomson Reuters. However, excluding autos, sales were down 0.1 percent, in line with expectations.

Shares of retailers including J.C. Penney Co., Macy’s Inc. and Target Corp., all fell after the monthly sales report.

Retail sales are critical to the economic recovery because shoppers account for a large amount of U.S. economic activity. High unemployment has kept customers out of stores and could hold retailers’ earnings in check.

The sales report added to the mixed signals on the pace of a recovery. Economic reports have largely showed a rebound is slowing, but recent earnings have largely topped expectations. Companies have also been optimistic in their outlooks for growth during the second half of the year.

“We have a lot of conflicting news here,” said Bob Enck, president and CEO of Equinox Fund Management in Denver. Until economic and earnings reports more closely align, the market is likely to remain choppy and volatile, Enck said.

In early afternoon trading, the Dow rose 7.64, or 0.07 percent, to 10,370.66. The Standard & Poor’s 500 index rose 0.25, or 0.02 percent, to 1,095.59, while the Nasdaq rose 13.22, or 0.59 percent, to 2,255.25.

Intel shares rose 76 cents to $21.70. AMD rose 7 cents to $7.55. J.C. Penney fell 32 cents to $22.87, while Macy’s dropped 6 cents to $18.46. Target fell 37 cents to $49.52.

Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange. Volume came to 455.4 million shares, compared with 495.4 million shares traded at the same time Tuesday.

Trading was tentative ahead of the release later Wednesday of the minutes from the Federal Reserve’s June meeting. Investors look at those comments closely for insight into how fast the Fed thinks the economy will grow in the second half of the year.

The Dow is trying to extend a six-session winning streak that has pushed the index up 7 percent, its best stretch since last July. The recent run-up has erased nearly all the Dow’s losses for the year.

The Dow rose 147 points Tuesday after aluminum producer Alcoa and railroad company CSX both reported better-than-expected profit. The pair also provided optimistic outlooks for the rest of the year.

Stocks were in a slump in May and June as economic reports showed the recovery wasn’t proceeding as fast as hoped. Rising debt problems in some European countries also added to the markets’ turbulence. However, early earnings reports have shown that slow economic growth is not hurting corporate profits. Investors’ concerns about a further slowdown later in the year have not been shared by companies, which have largely provided upbeat outlooks for future quarters.

“The forecasting has been great,” said Russell Croft, portfolio manager at Croft Leominster Investment Management in Baltimore. It has been outlooks, more than the most recent quarter’s results, that have pushed stocks higher in recent days, Croft added.

Bond prices rose slightly, pushing interest rates lower in the Treasury market. The yield on the benchmark 10-year Treasury note fell to 3.09 percent from 3.13 percent late Tuesday. That yield helps set interest rates on mortgages and other consumer loans.

The Russell 2000 index of smaller companies fell 0.90, or 0.14 percent, to 641.88.

Overseas, Britain’s FTSE 100 fell 0.33 percent, Germany’s DAX index rose 0.3 percent, and France’s CAC-40 fell 0.1 percent. Japan’s Nikkei stock average jumped 2.7 percent.