Wall St rebounds with help from tech shares; IBM tumbles

By Rodrigo Campos and Leah Schnurr

NEW YORK (Reuters) - Most U.S. stocks rose on Friday, bouncing back a day after the S&P 500 closed below its 50-day moving average for the first time this year, but IBM's largest drop in eight years held back the Dow.

Less than stellar earnings reports from McDonald's and General Electric also weighed on the blue chips. But some marquee tech names bolstered the broader market and drove the Nasdaq up more than 1 percent, a day after strong results from Google and Microsoft.

Even with the day's gain, the broad S&P 500 was on track for its worst week since last November. Markets were roiled earlier in the week by the plunge in gold prices and slower growth out of China, the world's second largest economy.

 

That put a dent in the market rally seen this year that had sent major indexes to new highs. The S&P 500's close below the 50-day moving average on Thursday indicates the medium-term uptrend in the market could be in peril. The last time the index closed consecutive days under its 50-day average came in early December.

Still, the S&P remains up nearly 9 percent for the year, and the pullback could give investors a chance to reevaluate their bets, said Michael Sheldon, chief market strategist at RDM Financial in Westport, Connecticut.

"Unless there's a shock to the system, investors will move back into the market as we head through earnings season, but now investors have an opportunity to study the winners and losers more closely," he said. "That could add to volatility as investors reposition themselves for the summertime."

A more than 8 percent decline in International Business Machines led the Dow lower after the company's quarterly results missed estimates. IBM was recently down 8.2 percent at $190.25, its largest daily percentage drop since April 15, 2005.

The Dow Jones industrial average <.DJI> slipped 13.59 points, or 0.09 percent, to 14,523.55. The Standard & Poor's 500 Index <.SPX> gained 11.53 points, or 0.75 percent, to 1,553.14. The Nasdaq Composite Index <.IXIC> rose 41.03 points, or 1.30 percent, to 3,207.40.

Trading seemed to be taking place normally even as much of Boston, a major U.S. financial center and home to a number of the country's biggest mutual fund companies, was under virtual lockdown after police killed one suspect in the Boston Marathon bombing in a shootout and mounted house-to-house searches for a second man.

Options volume was unusually light in the morning for the monthly expiration day taking place on Friday, which is typically a heavily traded session.

But trading in options picked up as the day progressed, and overall equities volume was at about 4.2 billion shares by mid-afternoon, putting it on track for an average to slightly above average day.

Last month's expiration day saw overall volume spike to 8.6 billion shares traded, the busiest day of the year so far, while expiry days in January and February saw volume of 6.7 billion to 6.8 billion shares.

GE shares fell 3.9 percent to $21.79 after the conglomerate reported a quarterly profit in line with expectations as GE sold more jet engines and shed its stake in NBC Universal. The stock topped the New York Stock Exchange's list of most actively traded names by volume at midday on Friday.

McDonald's stock lost 2.1 percent to $99.80 after the world's biggest fast-food chain reported a first-quarter profit that fell short of Wall Street's expectations and said sales at established U.S. restaurants fell 1.2 percent.

In the tech sector, some big names gave some investors a reason to buy equities.

Google's stock gained 3.1 percent to $789.82 after it reported its core Internet business increased net revenue in the first quarter. At least six brokerage firms have raised their target on Google's stock price.

Shares of Microsoft jumped 3.1 percent to $29.69 and topped the Nasdaq's most-active list after the company reported quarterly revenue and earnings that exceeded Wall Street's expectations.

But Dell shed 3.7 percent to $13.44 after Blackstone Group LP said it has ended its pursuit of the company.

(Additional reporting by Angela Moon and Doris Frankel; Editing by Nick Zieminski)