Financial stocks, one of the two sectors driving this week’s rally, ran into profit taking today as investors decided not to push their luck with earnings from Citigroup (C) due for release on Friday, July 17 before the market opens.
Technology stocks took up the slack with IBM (IBM), up $3.42 for the day, and Google (GOOG), up $4.43, leading the way. Both stocks announced earnings for the second quarter after the market’s closing bell and both companies beat Wall Street earnings projections handsomely–by 30 and 27 cents a share, respectively.
But investors hoping for a clear sign that the stock market is about to bust out of the trading range of 880 to 950 on the Standard & Poor’s 500 stock index got handed another cup of ambiguity after the close.
Although shares of IBM kept climbing, tacking on another $1.78 in trading after the bell on news that the company was raising revenue and earnings guidance for 2009, Google, on the other hand, sold off hard. That stock dropped $10 a share.
It wasn’t that Google’s results were so bad. Indeed the company announced the 15% increase in the number of paid search clicks, even as revenue per click fell, that analysts were expecting. But that there was nothing in the numbers to give investors a reason not to take profits after the day’s gain.
The sell off brought Google back very close to the $428 a share price it hit when the June rally came to an end.
The profit-taking in financials and in Google is yet more evidence that investors aren’t inclined to trust this rally to run very much higher.
Check the action on IBM and Google tomorrow after the open. If the full market bids them higher, then the technology stocks have a chance to keep this rally running. If IBM and Google sell off in the full session, as they did in the smaller after-hours market, then investors as a whole have cast their votes against this rally having much longer to run.