While you were sleeping: UPDATED Dow plunges as IBM revenue falls short

Wall Street was mixed, reflecting better-than-expected corporate earnings including from Morgan Stanley as well as disappointing results from IBM.

At the close of trading in New York, the Dow Jones Industrial Average fell 118.79 points, or 0.6%, to 20,404.49. The Nasdaq Composite Index rose 0.2% to 5863.03 while the Standard & Poor's 500 Index fell 0.2% to 2338.17.

"It's really a battle between geopolitical headlines and earnings right now, and for the most part earnings seem to be winning in the short term," Jeff Zipper, managing director of investments at the Private Client Reserve of US Bank in Palm Beach Florida, told Reuters.

The Dow's dive came from a drop in oil shares, Chevron falling 1.4% and Exxon Mobil 0.7%, as crude dropped 3.8% to $US50.44 a barrel, while IBM plunged 4.9% on a 13% drop in quarterly earnings.

This raised questions about the company's outlook.

"In 2016, they were really on a winning streak both in terms of stock performance and in terms of beating street expectations on revenue," Greg McDowell, an analyst at JMP Securities, told Bloomberg.

"When a company that size has a streak and that streak comes to an end, investors really want to dig into the underlying reasons."

Morgan Stanley rises
On the flipside, shares of Morgan Stanley rose 2% as the bank posted a stronger-than-expected rise of 70% in quarterly earnings, bolstered by bond trading revenue.

Keeping a lid on gains, investors are closely watching developments on tensions between the US and North Korea as well as the first round of French elections, slated for Sunday.

"We're still hugely vulnerable to political risks," Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London, told Bloomberg.

"Polling for the first round of the French election is hugely tight. We have no clear indication of how the drama in North Korea will play out. And those factors are more important to us than the ebb and flow of earnings news in the short term."

Meanwhile, the US economy grew at a pace "equally split between modest and moderate" between mid-February and the end of March, the Federal Reserve said in its Beige Book report.

"In addition, the pickup was evident to varying degrees across economic sectors," the Fed noted. "On balance, prices rose modestly."

In Europe, the Stoxx 600 Index ended the day with a 0.2% advance from the previous close. Germany's DAX Index rose 0.1%, while France's CAC40 Index gained 0.3%.

The UK's FTSE 100 Index slid 0.5%.

Shares of Burberry Group dropped 7.9% in London after the UK luxury retailer reported fourth-quarter retail comparable sales that failed to meet expectations.

(BusinessDesk)