Dow Gains as Global Investors Remain Wary
Global investors on Wednesday continued to shy away from risk-taking, although the selling abated somewhat in hard-hit emerging stock markets.
Wall Street ended little changed as Treasury bond yields stabilized and oil prices fell.
The Dow Jones industrial average eked out its second consecutive gain, benefiting as some investors sought the relative safety of big-name stocks amid nervousness about rising interest rates.
The Dow added 25.05 points, or 0.2%, to 11,005.74.
Winners and losers were nearly evenly matched on the New York Stock Exchange.
Stocks worldwide have pulled back in recent days, in part on concerns about interest rates.
The yield on the benchmark 10-year U.S. Treasury note has risen to its highest level since June 2004, pushed up by data showing resilience in the U.S. economy and by rising bond yields in Europe and Japan.
On Wednesday, however, the T-note yield ended unchanged at 4.73%.
Some traders may have been catching their breath ahead of today’s decision by the Bank of Japan to begin to slowly tighten credit. The central bank’s move ended a five-year experiment with ultra-loose monetary policy.
Last week, the European Central Bank raised its benchmark short-term rate to 2.5% from 2.25%.
The prospect of tighter credit in the U.S., Japan and Europe has caused some investors to lose their appetite for riskier assets, triggering selling in many stock markets -- and particularly in emerging markets that had been hot performers in recent months.
Worries about interest rates are “clearly destabilizing the markets and causing choppiness,” said Ben Halliburton, chief investment officer at Tradition Capital Management in Summit, N.J.
Brazil’s main stock market index lost 0.4% on Wednesday, bringing the decline from its recent peak to 5%.
The Mexican stock market lost 0.8% on Wednesday and is down 4.3% from its recent high.
Losses have been heavier in markets including Russia, Turkey and Saudi Arabia. The main Saudi stock index has plunged 16.2% from its recent peak. It had soared 104% last year.
The Fidelity Emerging Markets stock mutual fund has fallen 5.7% in the last four trading sessions.
The U.S. stock market’s losses have been modest in comparison. The Standard & Poor’s 500 index declined 1.2% in the four sessions through Tuesday, and on Wednesday added 2.59 points, or 0.2%, to 1,278.47.
The technology-heavy Nasdaq composite eased 0.92 of a point, or less than 0.1%, to 2,267.46 on Wednesday. It has lost 2.7% since reaching a 4 1/2-year high in mid-January.
The U.S. market was helped Wednesday as some investors bought blue-chip issues in so-called defensive sectors such as drugs and consumer products. Defensive stocks are those that would be expected to more easily weather global economic turmoil.
In the drug sector, Eli Lilly rallied 75 cents to $57.36, AstraZeneca rose $1.71 to $47.56 and Johnson & Johnson was up 52 cents to $58.74.
Among consumer-products issues, Procter & Gamble gained 77 cents to $61.07 and Altria rose 86 cents to $72.65. They were the Dow’s biggest winners.
Falling oil prices also supported stocks. Near-term crude futures in New York slid $1.56 to $60.02 a barrel after the president of the Organization of the Petroleum Exporting Countries said the cartel would hold output steady for the time being.
Among the day’s market highlights:
* Industrial issues struggled as some investors worried about the effect of higher global interest rates. Deere lost $1.39 to $74.94. Air Products & Chemicals gave up $1.74 to $62.80.
* Google dropped $10.57 to $353.88. Goldman Sachs analyst Anthony Noto, ranked No. 1 for Internet coverage by Institutional Investor magazine last year, trimmed his 2006 and 2007 estimates for Google’s earnings per share by about 2%, citing the possibility that Google would add fewer partners and draw less revenue.
* As investors hunted for defensive issues, some turned to beverage and drugstore shares.
Coca-Cola rose 43 cents to $42.23 and Anheuser-Busch rallied 48 cents to $42.18.
CVS, the No. 2 U.S. drugstore chain, gained $1.15 to $30.07 after Credit Suisse added the stock to its “focus list.”
* Airlines, which stand to benefit if oil prices recede, were higher. Continental Airlines jumped $1.09 to $25.04. AMR, parent of American Airlines, advanced $1.19 to $25.96. Both are near four-year highs.
* Glendale-based real estate investment trust Public Storage surged $3.40 to a record $80.57. The company on Tuesday said it would buy rival Shurgard Storage for $3.1 billion. Shurgard jumped $2.72 to $65.32.
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Pulling back
Stocks worldwide have sold off in recent days, led by emerging-market shares.
*--* Pctg. drop from Market/index recent peak* Saudia Arabia/Tadawul -16.2% Turkey/ISE-100 -11.3 Russia/RTS -7.9 South Korea/composite -7.6 Japan/Nikkei 225 -6.7 Brazil/Bovespa -5.0 Mexico/IPC -4.3 Germany/DAX -4.1 U.S./S&P; small-stock -2.7 U.S./S&P; 500 -1.2
*--*
*Through Wednesday
Source: Bloomberg News
