NEW YORK – Stocks were mixed on Wall Street Thursday, keeping the market’s big gain for October in check, as investors assessed some disappointing corporate earnings.
The stock market climbed to a record high this month even after a 16-day partial government shutdown and the threat of a U.S. debt default. While the shutdown hurt consumer confidence and pared economic growth, it ensured that the Federal Reserve kept up its economic stimulus effort.
The Standard & Poor’s 500 index’s monthly gain stands at 4.9 percent. The index has advanced in 10 of the past 12 months and is up almost 24 percent this year, putting it on track for its best annual performance in a decade.
Some analysts say that the precipitous rise in stocks may now make the market vulnerable to a potential drop.
“We’ve had a very strong market in the month of October,” said David Kelly, chief global strategist at JPMorgan funds. “Because stocks have gone up so much, people will get nervous about another big sell-off at some stage.”
On Thursday, the S&P 500 was flat at 1,764, as of 1:28 p.m. Eastern time. The Dow Jones industrial average was down four points to 15,614. The Nasdaq composite edged up two points to 3,933.
Earnings reports on Thursday painted a mixed picture of the health of Corporate America.
Avon slumped $5.19, or 23 percent, to $17.23 after the beauty products company reported a loss for its third quarter, reflecting lower sales in North America and the Asia Pacific region and China-related charges.
The company also said that the Securities and Exchange Commission is proposing a much larger penalty to settle bribery allegations than it expected and that the penalty could hurt its business.
Visa fell $5.58, or 3 percent, to $198.22 after the company said its quarterly net income fell 28 percent as it set aside money for taxes. Visa said it anticipates a slow recovery for the U.S. economy.
Overall, company earnings for the third quarter are beating analysts’ expectations and supporting stock prices.
Earnings for companies in the S&P 500 are expected to grow by 5.1 percent, according to data from S&P Capital IQ. About two-thirds of the companies in the index have now reported results and most have exceeded the expectations of analysts.
Stocks climbed to record levels in October on bets that the Fed would keep to its stimulus going until at least the start of next year. That view was reinforced by a weak jobs report that showed employers cut back on hiring in September before the government shut down began.
The Fed is buying $85 billion in bonds every month and keeping its benchmark short-term interest rate near zero. The stimulus has underpinned a rally in stocks that stretches back to March 2009.
The market will likely continue climbing as long as the central bank keeps up its stimulus, said Anton Bayer, CEO of Up Capital Management, an investment adviser. However, stocks could fall as much as 20 percent when the Fed does start to cut back on its bond-buying program, he said.
In government bond trading, the yield on the 10-year Treasury note rose to 2.56 percent from 2.54 percent on Wednesday.