US STOCKS-S&P 500, Dow slip on lackluster earnings

Reuters

* McDonald's pulls Dow lower; Apple helps Nasdaq tread water

* Netflix, Texas Instruments to report after the close

* Healthcare worst performing S&P sector

* Solar companies soar

* Indexes: Dow off 0.1 pct, S&P off 0.1 pct, Nasdaq up 0.1pct

By Julia Edwards

NEW YORK, Oct 21 (Reuters) - The S&P 500 and Dow slipped onMonday as a clutch of lackluster earnings reports fromMcDonald's and others fed concerns that equity valuations weregetting stretched after the S&P index's run to record highs lastweek.

Investors also showed a reluctance to make aggressive betsahead of Tuesday's release of U.S. payrolls data for September,which was delayed by the recent government shutdown.

The Dow was lower after McDonald's Corp fellfollowing a weak fourth-quarter outlook. A rally in Apple Inc shares after a brokerage ratings upgrade helped theNasdaq hold near the unchanged mark.

Though only a small percentage of S&P 500 stocks havereported earnings thus far, the season has been mixed, withrevenue growth especially a concern. Still, profits have largelyrisen and many bellwether companies have topped expectations.

"We are going into earnings season and the market is juststarting to digest the things that have come into play. Thenumbers have actually been decent, but you are just gettingstarted," said Thomas Nyheim, vice president and portfoliomanager at Christiana Trust in Greenville, Delaware.

"That's why there is not that much movement in the market,just anticipation."

With 21 percent of S&P companies having reported, 61.5percent have topped profit expectations, a rate slightly abovethe historical average. But only 52 percent have toppedexpectations on revenue, below the historical average of 61percent.

The S&P 500 on Friday capped its biggest weekly gain inthree months on stronger-than-expected earnings from Google and Morgan Stanley, as well as a deal inWashington temporarily resolving a political deadlock over thebudget and raising the debt-ceiling. The S&P ended at a recordhigh.

S&P sectors were mixed, with healthcare stocks making thebiggest decline, down 0.6 percent. Nyheim, who managesinvestments in health care stocks, said the sector will beunpredictable until the effects of President Obama's health carelaw play out.

"The push for healthcare is going to be greater as morepeople age and come online. We just don't know how it's going toaffect the bottom line," said Nyheim.

The Dow Jones industrial average was down 15.81points, or 0.10 percent, at 15,383.84. The Standard & Poor's 500Index was down 1.65 points, or 0.09 percent, at 1,742.85.The Nasdaq Composite Index was up 1.99 points, or 0.05percent, at 3,916.27.

Apple boosted the S&P 500 and Nasdaq after Societe Generalelifted its price target on the stock to $575 from $500 andadvised clients to buy shares. The stock rose 2.5 percent to$521.83 and was the largest winner on the Nasdaq, adding 7.8points to the index.

McDonald's fell 0.8 percent to $94.42 after it reportedrevenue that missed estimates and warned global October salescould be relatively flat.

More than 25 percent of the S&P 500 components are due toreport this week, with Texas Instruments and Netflix among the stocks to report after Monday's marketcloses.

While Netflix shares have soared this year, few shortsellers are expecting the stock to pull back following itsresults, a sign of how the Federal Reserve's stimulus programhas made successful negative bets by short sellers hard toexecute.

Hasbro Inc jumped 5.0 percent to a new all-time highas both earnings and sales topped expectations.

Solar power companies were among the strongest on Monday,with First Solar Inc up 9.5 percent to $54.76 as theS&P's top percentage gainer. Trina Solar rose 4.6 percent to $17.32 while SolarCity Corp gained 2.1percent to $60.60.

JPMorgan Chase & Co reached a tentative $13 billiondeal with the U.S. government to settle investigations into badmortgage loans sold to investors by JPMorgan and the banks itbought during the financial crisis. Shares were down 0.1 pct at$54.24.

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