Stocks Finish Session Mixed
Stocks wobbled to a mixed close Wednesday as a government report showed an improved supply outlook for oil, and the first day of earnings season forced investors to shift their focus to company news.
Investors were in the early stages of trying to assess what first-quarter corporate results might reveal about the economy’s momentum. Wall Street is likely to pay particular attention to the reports from industrial and financial companies, focusing on the effect that rising interest rates had over the course of the quarter.
During this period, it’s likely “the market is not going to move dramatically one way or the other,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group. But, he noted, stocks have tended to do better in the actual reporting season than during pre-announcements.
“It’s been a show-me-the-money kind of market, very reactive, waiting to see the results,” Kleintop said. “Usually it’s buy on the rumor, sell on the news, but lately the market’s been saying ‘I’ll buy on the news, thank you very much!’ ”
The Dow Jones industrial average rose 27.56 points, or 0.3%, to 10,486.02.
The broader gauges were mixed. The Standard & Poor’s 500 index added 2.68 points, or 0.2%, to 1,184.07. The Nasdaq composite index edged down 0.18 point to 1,999.14.
Advancers outnumbered declining issues by more than 3 to 2 on the New York Stock Exchange.
While the quality of corporate profits is likely to emerge as the main driver in the weeks ahead, Wall Street is also watching oil prices. A decline in crude coupled with a firmer dollar could help stocks break out of the low end of their current trading range, said Subodh Kumar, chief investment strategist with CIBC World Markets.
“There are two kinds of risks right now. One is oil prices going ever higher, the second is the U.S. dollar going ever lower,” Kumar said. “So you have to look at both of these things. A firmer dollar is better for capital market risk, and oil prices pulling back may reduce some fears about earnings and consumer spending.”
Treasury bonds continued their rally, with the yield on the benchmark 10-year note falling to 4.42% from 4.47% on Tuesday. Bond yields decline as their prices rise.
In the municipal bond market, California sold $779 million in tax-exempt general obligation bonds, less than the nearly $1 billion the state had originally said it might sell. All of the bonds were purchased by Merrill Lynch via competitive bidding.
Oil futures settled 19 cents lower at $55.85 after the government’s weekly fuel supply report showed a 2.4-million-barrel increase in inventories of crude. There also was a 2.1-million-barrel reduction in gas inventories, however, which could cause some concern as the summer driving season nears.
In Washington, Federal Reserve Chairman Alan Greenspan urged Congress to limit the size of the multibillion-dollar portfolios held by mortgage giants Fannie Mae and Freddie Mac, warning that stronger regulations alone would not sufficiently reduce the risk the companies pose to the U.S. financial system. Fannie Mae, the leading U.S. buyer of home mortgages, closed up $1.87 at $54.15; its rival, Freddie Mac, added $2.04 to $63.80.
In other market highlights:
* Cablevision Systems fell 98 cents to $26.85 after making a $16.5-billion bid for Adelphia Communications, which filed for bankruptcy in 2002. Comcast and Time Warner previously made a joint offer of $17.6 billion. Comcast shares fell 27 cents to $33 while Time Warner subtracted 16 cents to $17.56.
* A measure of energy shares rose 1.7% even as oil prices fell, for the best performance among 10 industry groups in the S&P; 500. ChevronTexaco, which agreed Monday to buy Unocal for $16.4 billion, rose $1.52 to $57.23. Unocal’s shares climbed 96 cents to $59.20.
* Dell retreated 98 cents to $38.15. After the close, the company said its first-quarter profit would meet the February projection of 37 cents a share and that it planned to buy $2 billion of its shares this quarter. The report may allay concerns about growth after revenue trailed the company’s forecast last quarter. Dell rose as high as $38.63 in extended trading.
* Alcoa was unchanged at $29.98 but rose as high as $31 in extended trading after the company said first-quarter earnings fell because of restructuring charges and other items. But profit from continuing operations narrowly beat Wall Street expectations.
