Stocks Close Mixed on Investor Worries
Wall Street, unable to shake a lethargy induced by interest rate worries, wobbled to a mixed finish Wednesday as investors shrugged off a $10.5-billion bank merger and a bullish upgrade of computer maker Dell.
U.S. Treasury prices and the dollar fell, while crude oil settled at a fresh 13-year high as worries over potential supply snags from violence in the Middle East outweighed a less-than-expected rise in stockpiled crude oil.
The Dow Jones industrial average shed 6.25 points, or 0.1%, to 10,310.95.
The broader gauges were modestly higher. The Nasdaq composite index added 6.78 points, or 0.4%, to 1,957.26. The Standard & Poor’s 500 index gained 1.98 points, or 0.2%, to finish at 1,121.53.
Advancers slightly outnumbered decliners on the New York Stock Exchange.
The market was still absorbing Tuesday’s statement from the Federal Reserve, which left interest rates unchanged but suggested the policymaking group would be inclined to push them higher as the economy continues to improve.
Analysts said trading was likely to remain volatile as the market further digests the Fed’s revised position, along with other concerns that have overshadowed generally strong economic data and corporate earnings.
“Investors are focused almost totally on Iraq, concern over interest rates and who might be living in the White House next year, and they’re continuing to ignore the very positive economic fundamentals,” said Alfred E. Goldman, chief market strategist with A.G. Edwards & Sons in St. Louis. “It’s very choppy because folks are not looking beyond the end of their noses.”
The next market-moving data will be released Friday, with the Labor Department’s April jobs report. Economists are forecasting an increase of 165,000 nonfarm payroll jobs. But last month’s surprise of 308,000 new jobs has many second-guessing those estimates.
Treasury prices fell in late trading, succumbing to rising pressure from expectations of higher rates. Bond yields rise as their prices fall, and the yield Wednesday on the benchmark 10-year Treasury rose to 4.58%, up from 4.57%.
The dollar dropped against the euro as investors took profits ahead of Friday’s employment report.
Hopes for higher rates had acted as a key support for the dollar during its rally of nearly 12 cents against the euro from February to April, until that rally began to falter in the last few sessions.
“If they [payroll numbers] come in really strong, then it might change the Fed’s view of things,” said David Schoenthal, senior managing director at Bear Stearns in New York. “Maybe they are going to react faster. That would be good for the dollar.”
Another strong jobs growth number would be expected to reinforce the case for an early tightening, a move that would make holding U.S. assets more attractive and lift the currency.
But a surprisingly weak U.S. jobs report probably would restrain rate-hike expectations and hurt the dollar.
Oil prices surged on worries about the security of supplies from the Middle East and fears of summer gasoline shortages in the United States. In New York trading, crude oil for June delivery rose 59 cents to $39.57 a barrel, the highest settlement for prompt crude since Oct. 12, 1990, two months after Iraq invaded Kuwait.
Fears of oil supply disruptions from the Mideast are weighing heavy right now, analysts said. Last weekend there was an attack on a petrochemical complex in Yanbu, Saudi Arabia, which followed a suicide attack on the Basra oil terminal in southern Iraq.
Among Wednesday’s market highlights:
* Dell rose 40 cents to $35.71 on an upgrade from Banc of America Securities, which raised its annual forecast on improved margins and computer and notebook sales forecasts.
* Coca-Cola gained 82 cents to $51.09 after naming a former top official for one of its bottlers as its new chairman and chief executive. The appointment of E. Neville Isdell to succeed retiring CEO Douglas Daft ended months of speculation over who would be the next leader of the world’s largest beverage maker.
* Charter One Financial soared $7.91, or 22%, to $43.86 after Royal Bank of Scotland Group announced plans to purchase it for $10.5 billion through its Citizens Financial Group subsidiary. The combined entity would be one of the 10 largest banks in the United States.
* Oil-services shares declined after Banc of America Securities lowered its rating on the sector, citing an expected drop in drilling activity. Schlumberger lost 79 cents to $58.39, and Halliburton fell 31 cents to $29.74.
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Markets Roundup, C7
