Feb. 16 (Bloomberg) -- U.S. stocks were little changed as oil companies and steelmakers led a rebound from early losses tied to Federal Reserve Chairman Alan Greenspan's suggestion that the pace of interest-rate increases isn't about to slow.

Financial stocks such as Bank of America Corp. and Wachovia Corp. dropped after the Fed chairman told Congress that borrowing costs remain ``fairly low.''

``The market is finally taking Greenspan seriously that he's going to continue taking up rates,'' said Jim Swanson, chief investment strategist at MFS Investment Management, which oversees $146 billion in Boston.

A surge in the price of oil lifted energy-related shares including Exxon Mobil Corp. and takeover speculation spurred the rally in steel companies such as U.S. Steel Corp.

The Standard & Poor's 500 Index rose 0.22 to 1210.34, its smallest move this year. The Dow Jones Industrial Average lost 2.44 to 10,834.88 even after Coca-Cola Co., the world's largest soft-drink maker, reported better-than-expected earnings. The Nasdaq Composite Index lost 1.78, or 0.1 percent, to 2087.43.

About five stocks advanced for every four that declined on the New York Stock Exchange. Some 1.5 billion shares changed hands on the Big Board, 1 percent more than the three-month daily average.

Trading Day

The S&P 500 fell as much as 0.4 percent following Greenspan's testimony. The benchmark erased its losses before 3 p.m. and then increased as much as 0.2 percent.

``The economy seems to have entered 2005 expanding at a reasonably good pace, with inflation and inflation expectations well anchored,'' the Fed chairman said to the Senate Banking Committee. ``The evidence broadly supports the view that economic fundamentals have steadied.''

Greenspan's text did not mention the Fed's policy pledge to continue raising interest rates at a ``measured'' pace. Adjusted for inflation, the federal funds rate ``by most measures'' remains ``fairly low,'' the chairman said.

Wachovia, the fourth-largest U.S. bank, declined 37 cents to $54.54. Bank of America, the nation's No. 3 lender by assets, fell 29 cents to $46.77. Citigroup Inc., the world's biggest financial-services company, lost 22 cents to $49.18.

The central bank has lifted the benchmark interest rate six times since June to 2.5 percent from an almost 46-year low.

``Rates are still probably going to go up'' more than the market anticipates, said Mark Roach, who helps manage $4 billion at Vaughan, Nelson, Scarborough & McCullough LP in Houston. Greenspan is saying the Fed is still ``pretty accommodative.''

Energy Shares Climb

Oil futures for March delivery increased 2.3 percent to $48.33 a barrel in New York, the highest since Jan. 27, after the Organization of Petroleum Exporting Countries said global oil consumption will increase more than it forecast last month, led by surging demand in China.

The S&P 500 Energy Index has advanced 14 percent this year to lead gains in the benchmark. The group jumped 29 percent in 2004, also the best performance in the S&P 500.

Exxon Mobil, the world's largest publicly traded oil company, climbed $1.56 to $58.48. Its 2.7 percent gain was the steepest in the Dow average. Williams Cos., the biggest U.S. operator of natural-gas pipelines, added 98 cents to $18.75.

`Bullish Story'

``The bullish story is still alive for commodities and for energy,'' said Amaury Conti, a trader at Austin Calvert & Flavin Inc., which oversees about $1.5 billion in San Antonio. ``You still have growing demand out of Asia, India and some other countries.''

Shares of U.S. steelmakers climbed on speculation the producers may be acquisition targets for larger companies in Europe, including Arcelor SA.

U.S. Steel, the No. 1 U.S. steelmaker, surged $3.86, or 7.3 percent, to $56.55 for the second-biggest advance in the S&P 500. Nucor Corp., the largest U.S. maker of steel from recycled metal, climbed $2.94 to $59.68.

Mittal Steel Co., which is planning to buy International Steel Corp. in the U.S. to become the world's biggest steelmaker, and Luxembourg-based Arcelor may lead acquisitions after steel prices rallied, Business Week reported on its Web site, citing consultant Peter Marcus of World Steel Dynamics Inc.

The Standard & Poor's Supercomposite Steel Index, which tracks shares of 12 steel producers, rose 5 percent, the biggest gain since Nov. 26.

Coca-Cola

Coca-Cola added 65 cents to $43.30. The company said fourth-quarter profit, excluding a tax-related gain and insurance settlement, was 46 cents a share, 6 cents more than the average analyst estimate in a Thomson Financial poll.

Network Appliance Inc. lost $2.63, or 7.7 percent, to $31.73 for the second-biggest decline in the S&P 500. The company said yesterday that sales in the fiscal fourth quarter will be as low as $437.5 million, less than the average analyst estimate of $449.9 million in a Thomson survey.

Cooper Tire & Rubber Co. lost $2 to $19.50. The No. 2 U.S. tiremaker said quarterly profit from continuing operations dropped 58 percent to $3.22 million on slower sales of tires and higher costs for materials such as rubber. Goodyear Tire & Rubber Co., the largest North American tiremaker, also declined, falling 54 cents to $13.91.

Career Education

Career Education Corp. dropped $2.02 to $37.19. The operator of adult schools said fourth-quarter profit was 57 cents a share, trailing the average analyst estimate of 66 cents, according to a Thomson survey. The company restated results for the past five years.

Pfizer Inc. and Merck & Co. slid on concern that their credit ratings may be eroded by acquisition costs after the Wall Street Journal reported the companies are likely to buy smaller competitors this year. Pfizer, the world's biggest drugmaker, fell 27 cents to $24.95, while Merck, the third- largest, declined 33 cents to $29.02.

The S&P 500 shares, called Spiders, rose 8 cents to $121.21. Nasdaq-100 tracking shares, known by their QQQQ symbol, slid 14 cents to $37.98.

S&P 500 futures expiring in March slipped 0.20 to 1210.50 on the Chicago Mercantile Exchange. Nasdaq-100 Index futures dropped 3 to 1545.50.

The Russell 2000 Index, which tracks companies with a median market value of about $496.4 million, gained 3.91 to 638.85.

The Dow Jones Wilshire 5000 Total Market Index, the broadest measure of U.S. shares, rose 11.71, or 0.1 percent, to 11,922.89. Based on changes in the Wilshire, the value of stocks increased by $14.1 billion.

Bank of America Corp. (BAC US)
Career Education Corp. (CECO US)
Coca-Cola Co. (KO US)
Cooper Tire & Rubber Co. (CTB US)
Exxon Mobil Corp. (XOM US)
Goodyear Tire & Rubber Co. (GT US)
Merck & Co. (MRK US)
Network Appliance Inc. (NTAP US)
Nucor Corp. (NUE US)
Pfizer Inc. (PFE US)
U.S. Steel Corp. (X US)
Wachovia Corp. (WB US)
Williams Co. (WMB US)

To contact the reporter on this story: Ari Levy in New York at alevy5@bloomberg.net.

Last Updated: February 16, 2005 17:39 EST