April 28, 2015 / 12:38 AM / 2 years ago

U.S. shares rebound; oil pares gains after Iran ship seizure

Traders work on the floor of the New York Stock Exchange shortly after the opening bell April 27, 2015. REUTERS/Lucas Jackson

NEW YORK (Reuters) - Two of three major U.S. stock indexes rose modestly on Tuesday as Merck posted strong earnings and IBM raised its dividend, while European stocks slid on weak corporate results and oil prices were flat to lower on expectations that U.S. crude stockpiles have reached record highs.

Merck shares jumped more than 5 percent after the U.S. drugmaker beat quarterly earnings estimates. IBM shares rose 1.9 percent and were the biggest positive influence on the Dow after the company hiked its quarterly dividend by 18 percent. Losses in Apple shares weighed on the Nasdaq.

Data showing U.S. single-family home prices rose more than expected in February contributed to the afternoon rebound, although the data was released earlier in the session when some weak corporate results depressed U.S. shares.

“The market, in between the earnings reports, is still always looking at the macro trends,” said Margaret Patel, senior portfolio manager at Wells Capital Management in Boston. “The housing numbers were very positive for the economy.”

In Europe, however, disappointing corporate earnings handed shares their biggest daily decline in over a week, with paper maker UPM-Kymmene slipping after results while a new share issue hit Commerzbank.

Oil prices seesawed as traders weighed security scares in the Middle East and support from a weak dollar against expectations that U.S. crude stockpiles have reached record highs.

Iranian forces boarded a Marshall Islands-flagged cargo ship in the Gulf on Tuesday, the Pentagon said, an event which spurred a brief rally in oil prices.

“Tensions are so high in that region with the impending Iran-U.S. nuclear deal that any event implied to be U.S.-linked has an immediate effect on oil prices,” said John Kilduff, partner at New York energy hedge fund Again Capital.

Brent crude fell 19 cents in U.S. trading to settle at $64.64 a barrel. U.S. crude settled up 7 cents at $57.06 per barrel.

The start of the Federal Reserve’s two-day policy meeting injected some caution into markets. Analysts expect soft U.S. data will nudge the U.S. central bank toward a dovish monetary policy.

The dollar index, which measures the greenback against a basket of major currencies, fell to an eight-week low of 96.011 after an unexpectedly weak U.S. consumer confidence report for April.

The Dow Jones industrial average closed up 72.17 points, or 0.4 percent, at 18,110.14. The S&P 500 closed up 5.84 points, or 0.28 percent, at 2,114.76. The Nasdaq Composite closed down 4.82 points, or 0.1 percent, at 5,055.42.

MSCI’s all-country world stock index, which tracks shares in 45 nations, was last up 0.44 points or 0.1 percent, to 442.61.

Europe’s broad FTSEurofirst 300 index closed down 1.49 percent at 1,618.26.

U.S. Treasury yields rose as investors reduced bond holdings to make room for government and corporate supply. Benchmark 10-year U.S. Treasury notes were last down 19/32 in price to yield 1.99 percent, from a yield of 1.92 percent late Monday.

U.S. gold futures for June delivery settled up $10.70 an ounce at $1,213.90.

Reporting by Sam Forgione; Additional reporting by Tanya Agrawal in Bengaluru and Gertrude Chavez-Dreyfuss and Barani Krishnan in New York; Editing by Nick Zieminski

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