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S&P 500 Hits New Highs as Debt Deal Takes Effect

Dan Berman
Hot Stock Minute

Stocks pared early losses sending the S&P 500 to set new closing and intraday highs. The Nasdaq closed at a 13-year high, but the Dow was fractionally lower, weighed down by IBM. This after the short-term debt deal became official and the government shutdown ended after 16 days as part of a "baby-grand agreement." The legislation, which was signed by President Obama overnight, ends the infighting for now. However, it sets the stage for more showdowns down the road: the government has reopened until January 15th, the country's debt will be funded through February 7th, and there's a December 13th deadline for Democrats and Republicans to hammer out a blueprint for longer-term tax and spending policies.

POLL: How pleased are you with short-term debt deal?

IBM (IBM) dragged down the Dow today as it sank 6.4% after reporting revenues that were more than $1-billion short of estimates at $23.72-billion. The company actually beat on the bottom line making adjusted earnings of $3.99 a share, 3-cents better than expectations. However, the sales figures point to deeper worries about IBM's ability to grow or even maintain its business.

Meanwhile, four other Dow components reported their quarterly results: Goldman Sachs (GS), Verizon (VZ), UnitedHealth Group (UNH), and American Express (AXP).

Goldman easily beat on the bottom line with adjusted earnings of $2.88 a share versus expectations of $2.47, but revenue was below estimates at $6.72-billion versus $7.35-billion. The stock closed lower by 2.5%.

As for Verizon, it beat on both the top and bottom lines with adjusted earnings of 77-cents a share versus 74-cents on sales of $30.28-billion versus $30.161-billion. Profits were up 40% over last year, largely on activations of new iPhones. Shares climbed 3.5%.

UnitedHealth Group fell 5% on its quarterly report. The company matched on earnings estimates reporting $1.53 a share. That was about a 1% gain over last year. Revenue was slightly under estimates at $30.62-billion compared to $30.86-billion. UnitedHealth says it now has 45.3-million people enrolled in health plans.

American Express (AXP), which reported after yesterday's closing bell, shot up more 5% today. Amex beat on earnings posting profits of $1.25 a share, a nickel better than estimates. That was a 9% rise over last year. Revenue also topped expectations at $8.3-billion compared to $8.19-billion. The company is pointing to an increase in usage of its cards.

Looking beyond the Dow, eBay (EBAY) fell 4% today on its earnings which were released after yesterday's closing bell. The company posted profits of 64-cents a share, which was a penny better than estimates, still it fell slightly short of the consensus on revenues with sales of $3.89-billion versus $3.91-billion. eBay's year-to-date chart looks pretty jagged, but the stock price is essentially unchanged since the start of 2013.

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