Stocks Finish Mixed; Apple Casts Shadow

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NEW YORK (TheStreet) -- Wall Street finished mixed on Tuesday with the Dow pushed higher by positive earnings reports and a dividend hike from IBM , and the Nasdaq tripped up by weakness in Apple .

The market put aside worries about Europe for the day, instead focusing on solid numbers from AT&T and 3M , as well as Big Blue's plans to boost its quarterly payout by 13% and buy back up to $7 billion worth of its stock.

The Dow Jones Industrial Average rose 74 points, or 0.6%, to close at 13,001. Earlier in the session, the price-weighted index ran as high as 13,050. The S&P 500 tacked on 5 points or 0.4% to finish at 1372.

The Nasdaq slipped 8 points, or 0.3%, to settle at 2961. Apple was a headwind for the index, falling 2%. Shares of the iPad and iPhone maker have now fallen in 10 of the past 11 sessions.

It was a different story after the closing bell though as the stock flew more than 7% higher in the extended session. The iconic company reported fiscal second-quarter earnings of $12.30 a share on revenue of $39.2 billion, trouncing Wall Street's expectations for a profit of $10.04 a share.

The company sold 35.1 million iPhones during the quarter, up 88% from a year ago. The third-quarter outlook looks light however. Apple expects earnings of $8.68 a share in the June-ending period on revenue of $34 billion, below the current consensus view for a profit of $9.93 a share on revenue of $37.45 billion.

Tuesday's economic data was benign with consumer confidence coming in slightly below expectations but new home sales and the Case-Shiller home price index supportive of slow but continuing improvement in the housing market.

Within the Dow, 23 of the index's 30 components finished in the green on Tuesday. Breadth in the broad market was positive as well with winners outpacing the losers by 2 to 1.

The biggest percentage gainer among the blue chips was AT&T, whose shares rose nearly 4%. Before the opening bell, the company easily beat Wall Street's earnings estimate with its performance boosted by strong wireless sales and its smartphone business.

The telecom giant brought in revenue of $31.82 billion, an increase of 1.8% from the same period last year. Analysts surveyed by Thomson Reuters were looking for sales of $31.85 billion. Excluding items, AT&T earned 60 cents a share, up from 57 cents a share in the prior year's quarter and above Wall Street's estimate of 57 cents.

IBM said its board has approved a quarterly cash dividend of 85 cents a share, up from a prior payout of 75 cents a share, payable June 9 to shareholders of record on May 10. The fresh $7 billion addition to its buyback program will bring IBM's total current repurchase authorization to $12.7 billion, and the company said it plans to request more buyback power from the board in October. Shares added 0.6% to close at $200.

Shares of 3M were popped by 1.6% after the maker of Post-It notes and Scotch brand adhesive tape reported first-quarter earnings of $1.12 billion, or $1.59 a share, up from year-earlier earnings of $1.08 billion, or $1.49 a share. The latest quarter included a one-time charge of 4 cents a share.

Analysts, on average, were expecting earnings of $1.49 a share. Sales rose 2.4% to $7.5 billion. 3M also raised its 2012 profit view to a range of $6.35 to $6.50 a share.

A big mover to the downside was Netflix with shares tanking 14%. The DVD and streaming content company gave a weak subscriber outlook after Monday's closing bell. Its outlook for revenue of $873 million to $895 million in the second quarter was also a negative, offering downside to the current consensus view of $895.1 million.

Radioshack was another big loser, tumbling more than 10% after it reported an unexpected loss.

In other corporate news, Wal-Mart said it has taken steps to prevent corruption with the appointment of a global compliance officer, following a New York Times report that said the company had paid bribes to speed up the construction of new stores in Mexico. Shares closed lower by 3% on Tuesday, following a nearly 5% decline on Monday.

In economic news, the Department of Commerce reported that new homes sales dropped 7.1% in March to a seasonally adjusted 328,000-unit annual rate after the February data was upwardly revised to 353,000. The market was expecting a modest rise in March home sales to 320,000 from 313,000 the prior month.

The Commerce Department also said that inventory of U.S. homes for sale fell to a record-low of 144,000 units in March. At that rate, houses could be cleared from the market in about 5.3 months, a rise from five months in February.

The Federal Housing Finance Agency's Housing Price Index increased 0.3% a seasonally adjusted basis in February from January as inventories continue to edge lower.

The Conference Board said that the consumer confidence index decreased to 69.2 in April, lower than the 69.7 expected from a Thomson Reuters poll and from a downwardly revised 69.5 the previous month. The number was the weakest since January.

Earlier, the Case-Shiller 20-city Index showed a slight rise in February, up 0.15% from January, falling slightly short of the consensus view for an increase of 0.2%, and bringing it to an annual decline of 3.5% versus the expected fall of 3.4%.

Also, the Federal Reserve's latest two-day meeting on monetary policy starts Tuesday. Economists expect the central bank to stay committed to low rates until 2014, with Chairman Ben Bernanke likely leaving the door open for further quantitative easing. Bernanke is slated to hold one of his quarterly news conferences on Wednesday.

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June oil futures rose 44 cents to settle at $103.11 a barrel, while June gold futures rose $11.20 at $1,643.80 an ounce.

The benchmark 10-year Treasury was slipping 10/32, pushing the yield to 1.97%, while the U.S. dollar index was down 0.2% at $79.25.


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In Europe, London's FTSE finished ahead by 0.8% and Germany's DAX rose 1%. Elsewhere, Japan's Nikkei Average finished down 0.8% and Hong Kong's Hang Seng index closed up 0.3%.

-- Written by Andrea Tse and Shanthi Bharatwaj in New York.

>To contact the writer of this article, click here: Andrea Tse.

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