Wall Street rebounds after selloff; Apple weighs on techs

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Credit: Reuters/Brendan McDermid

1 of 3. Traders work on the floor of the New York Stock Exchange January 24, 2014.

The Nasdaq underperformed the broader market, pressured by Apple Inc (AAPL.O) shares, which plunged after holiday iPhone sales missed expectations. The shares of Apple suppliers such as Qualcomm Inc (QCOM.O) and Cirrus Logic Inc (CRUS.O) also tumbled and pulled on the Nasdaq.

Orders for long-lasting U.S. manufactured goods unexpectedly fell 4.3 percent in December, and a gauge of planned business spending on capital goods also slid, which could cast a shadow on an otherwise bright economic outlook.

The durable goods report preceded the start of a two-day policy meeting of the U.S. Federal Reserve. Investors will closely watch the outcome of the meeting to see if the Fed will announce another $10 billion reduction in its monthly bond-buying program.

'Even though there's been a sharp reversal in risk taking, the best way to characterize investor attitudes is 'confused',' said Jack Ablin, chief investment officer of BMO Private Bank, in a note to clients.

'Nowadays, a high number of individual investors are characterizing themselves as 'neutral' when measured against 'bullish' and 'bearish' respondents. Neutral investors don't know what to expect.'

The S&P 500 has declined for three consecutive sessions on concerns about more withdrawal of U.S. monetary stimulus and slowing Chinese growth, which amplified country-specific political turmoil from Turkey to Thailand. Last week, the broad market index marked its worst percentage loss since June 2012.

On Tuesday, the Dow Jones industrial average .DJI rose 75.84 points or 0.48 percent, to 15,913.72. The S&P 500 .SPX gained 8.19 points or 0.46 percent, to 1,789.75. The Nasdaq Composite .IXIC added just 0.336 of a point or 0.01 percent, to 4,083.945.

Apple shares fell to their lowest since October - down 7.4 percent at $509.54 by midday trade. The tech bellwether's iPhone sales in the holiday shopping season missed lofty expectations and the company forecast weak revenue for the current quarter in quarterly results released on Monday after the closing bell.

Activist investor Carl Icahn said he bought another half-billion dollars' worth of Apple stock, his third investment in the iPhone and iPad maker in less than a week. The purchase boosts his stake to more than $4 billion.

Elsewhere in the earnings arena, Pfizer Inc (PFE.N) reported better-than-expected fourth-quarter results on Tuesday, helped by sales of new treatments for cancer, nerve pain and arthritis. Pfizer's stock shot up 2.5 percent to $30.40 and provided the biggest boost to the Dow.

Another bright spot was data that showed U.S. consumer confidence rose in January as consumers grew more optimistic about both business conditions and the job market, according to a report released on Tuesday by the Conference Board, an industry group.

U.S. single-family home prices in November rose slightly more than expected from the previous month, while the increase from a year ago was the biggest in almost eight years, a closely watched survey said on Tuesday.

(Editing by Nick Zieminski and Jan Paschal)