One day after the Dow Jones industrial average had its best day this year, the stock market is drifting between slight gains and losses Wednesday. Analysts say concerns about lifting the U.S. debt limit are trumping strong earnings from Apple and a slew of new deals.
"In this environment, stringing together a few days like yesterday is going to be tough," said Brad Sorenson, director of market analysis at Charles Schwab.
Apparent progress in raising the U.S. debt limit to avoid a default launched a stock market rally Tuesday. The Dow jumped 202 points, its best day this year. But investors woke up Wednesday to find Washington still at a stalemate. And with less than two weeks before the government risks defaulting on its debt, they are finding it hard to continue the celebration.
Apple Inc. rose 3 percent after the company's income doubled last quarter, trumping analysts' estimates. Sales of the company's iPhones quadrupled in Asia.
American Airlines' parent company, AMR Corp., gained more than 2 percent after announcing an order for 460 planes, split between Boeing and Airbus. The new planes are expected to save money on fuel. Rising fuel prices left the airline with a loss of 85 cents a share, larger than analysts expected. The airline also said it would spin off its American Eagle subsidiary.
News of record earnings and new deals would usually brighten investors' mood, Sorenson says. In the current earnings season, for instance, some 75 percent of companies in the Standard & Poor's 500 index have beaten analysts' estimates. But larger worries about debt troubles in the U.S. and Europe are holding the market back. "It's causing investors and businesses and consumers to be concerned about the future," he said.
The Dow is up 2 points, or 0.1 percent, to 12,589 in afternoon trading. United Technologies Corp. dropped more than 2 percent, weighing on the Dow.
The S&P 500 index is up 2 points to 1,328. The Nasdaq fell 6 points, or 0.2 percent, to 2,819.
Clorox rose 3 percent after billionaire investor Carl Icahn raised his bid for the company to $80 a share. The consumer products company rejected his previous offer.
E-Trade Financial Corp. gained 15 percent, the most of any stock in the S&P 500 index. E-Trade's largest shareholder urged the online discount brokerage to consider putting itself up for sale. In a letter to E-Trade disclosed in a regulatory filing, the money manager Citadel LLC called for changes to the company's board, saying E-Trade's "phenomenal franchise" had been "squandered."
The stock of Zillow, a real estate website, jumped 78 percent in its first day of trading. Zillow's initial public offering priced at $20 late Tuesday. In the late afternoon, it was trading at $36.
Cleaning and pest-control services company Ecolab Inc. said it would buy the water treatment company Nalco Holding Co. for $5.4 billion. Nalco soared 24 percent while Ecolab dropped 8 percent.
Tuesday's rally turned the three major indexes positive for the month. The Dow and Nasdaq are now up more than 1 percent in July. The S&P 500 is up 0.6 percent.
Intel Corp. and American Express Co. are scheduled to report earnings after the market closes.