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Dow struggles while S&P advances again

In a similar story to yesterday, the wider stock market has risen while the Dow heads lower after declines in significantly-weighted components.

Earnings continue to come in mixed, with the rise of Dow component United Technologies, which beat estimates with its fourth-quarter earnings, being eclipsed by a fall in heavier-weighted Dow component IBM, which also surpassed forecasts with its profit, but missed on the revenue front. Shares in IBM slipped 3.5%, acting as the biggest drag on the Dow today.

The stock market is largely up today, with the S&P 500 advancing 0.05% to 1844.6 in early afternoon trading in New York, while the NASDAQ 100 climbed 0.32%. The Dow Jones declined for a second day, though, dropping 0.16% to 16,387, a result of the index’s susceptibility to big movements in heavily-weighted components (IBM is second only to Visa in ternms of weighting in the Dow, making up more than 7% of the index's value).

Yesterday we saw a few companies surprise to the upside with earnings but suffer a share price drop on the back of soft forward guidance. It’s a similar story today with chip-manufacturer Advance Micro Devices, which delivered a strong final quarter for 2013, but fell more than 10% after predicting another decline in the PC sector this year and advising that sales for the company will drop steeply in the first quarter.

In the forex market, the Canadian dollar weakened after the Bank of Canada revised its inflation forecast lower and warned that the strength of the currency poses a problem for exports, despite its recent depreciation. USD/CAD has jumped more than 1% today.

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