IBM drags on Dow; oil rally fuels energy shares

The Dow Jones Industrial Average slipped on Wednesday with International Business Machines (IBM) shares weighing on the index, while energy and industrial shares helped the broader market post modest gains.

The Dow fell 38.56 points, or 0.16%, to 24,748.07. The S&P 500 rose 2.25 points to 2,708.64. The Nasdaq Composite was up 14.14 points, or 0.19%, at 7,295.24.

IBM tumbled 7.5%, its worst day in five years, following the company’s after-hours earnings release on Tuesday. While the tech giant surpassed analysts’ first-quarter revenue and earnings expectations, its gross profit margin missed estimates (43.7% adjusted vs. 45.5% estimate). It was the second consecutive quarter that disappointing margins hit the stock. IBM also offered a weaker outlook than anticipated.

Without IBM’s decline, the Dow would have been up 45 points on the day.

Morgan Stanley (MS) posted record first-quarter profit thanks to a surge in trading activity but indicated that growth could slow. Shares were little changed.

Energy shares got a boost from a rally in oil prices after new data showed a decline in gasoline and distillate supplies. U.S. crude futures jumped $1.93, or 2.9%, to $68.47 a barrel, the highest level in almost three and a half years.

Exxon Mobil’s (XOM) stock was up 1.1%, while Chevron (CVX) gained 1.9%.

CSX (CSX), the third-largest U.S. railroad operator, beat earnings estimates. Shares climbed 7.9%.

Ticker Security Last Change Change %
XOM EXXON MOBIL CORP. 116.23 +1.18 +1.03%
CSX CSX CORP. 37.07 +0.23 +0.62%
IBM INTERNATIONAL BUSINESS MACHINES CORP. 190.91 +0.09 +0.05%

Political tensions in Asia eased on reports South Korea said it was talking with North Korea about a peace agreement. The U.S. confirmed that Secretary of State nominee Mike Pompeo, the current director of the CIA, met with North Korean leader Kim Jong Un over Easter weekend to discuss the planned summit with President Donald Trump.

“The apparent success of Trump’s highly forceful approach to dealing with North Korea will no doubt embolden Trump in his tough stance on trade with the likes of the Chinese,” said Joshua Mahony, market analyst at IG.