Stocks drifted to trade mixed Wednesday afternoon, as some technology stocks rose on some positive corporate news while weakness in Wal-Mart (WMT) pressured blue chips.
The Dow Jones industrial average lost 5.09 points, or 0.05%, to 10,389.98. The broader Standard & Poor's 500 index was up 0.83 points, or 0.07%, to 1,135.24. The tech-heavy Nasdaq composite index added 10.64 points, or 0.53%, to 2,004.79.
Among market sectors, telecom equipment makers were gaining ground on bullish sentiment spurred by SBC's (SBC) plan to spend $4 billion to $6 billion on broadband access, Digital TV, and VoIP over the next 5 years. JDS Uniphase (JDSU) and Broadcom (BRCM) rallied.
Also helping the group was 3Com (COMS), which reported a narrower May quarter loss of 5 cents per share, vs. an 11-cent loss a year ago, on 4.8% sales rise. The company expects first-quarter total revenues to be flat to slightly up sequentially.
Food distributors were in the red after Performance Food Group (PFGC) lowered its second-quarter earnings forecast, citing lost margin in its food service business, retooling of plants, and roll-out of a new product. In addition, several Wall Street firms downgraded the stock.
Among stocks on the move Wednesday, Career Education (CECO) plunged about 20% after the company received notice of a formal SEC investigation. Merrill Lynch downgraded the stock to neutral from buy, while Bear Stearns lowered its rating to peer perform from outperform.
Wal-Mart (WMT) stock was down another 2%, weighing on Dow average, after Tuesday's news that a federal judge granted class action status to a sex-discrimination lawsuit against the giant retailer.
RJ Reynolds (RJR) shares rose after the FTC closes its investigation and will not challenge RJR's plan to buy the U.S. business of Brown & Williamson Tobacco, owned by British American Tobacco (BIT). RJR sees the deal generating $500 million in synergies within 18 to 24 months. RJR says the new company will pay $400 million to buy Lane Ltd.
In other merger news, eBay (EBAY) agreed to buy Indian online-auction site Baazee.com for $50 million.
FedEx (FDX) shares rose after the company posted fourth-quarter earnings per share of $1.33, vs. 92 cents a year ago, on a 21% revenue rise. The delivery company sees EPS of 90 cents to $1.00 for the first quarter and $4.20 to $4.40 for fiscal year 2005. It cited a broad-based economic improvement across many sectors in the U.S. and world economies.
Other companies on Wednesday's earnings calendar include Bed Bath & Beyond (BBBY), Micron Technology (MU), Kerr-McGee (KMG), Worthington Industries (WOR), and more.
There are no major economic reports scheduled for Wednesday. The economic calendar is busier at the end of this week, starting with a read of durable goods orders for May on Thursday. Traders will also get their weekly dose of initial jobless claims, plus a read on new home sales for May. Friday delivers the final gross domestic product figures, as well as Michigan's consumer sentiment survey results for June and existing home sales.
Treasury prices rose amid solid results for the auction of $25 billion in two-year notes. The yield on the benchmark 10-year note moved lower to 4.69%. Look for more range trading in Treasuries, however, as the wait for the June 30 events keeps trading quiet, says Action Economics.
European stock markets finished higher. London's FTSE 100 index was up 18.2 points, or 0.41%, to 4,486.7, with help from tobacco stocks. British American Tobacco (BTI) was higher after the U.S. Federal Trade Commission approved the merger between RJ Reynolds (RJR) and BAT's Brown & Williamson unit.
Germany's DAX index rose 19.82 points, or 0.54%, to 3,945.1 even though German industrial production rose 1.4% in April, down from 2.2% in March. In Paris, the CAC 40 index gained 19.82 points, or 0.54%, to 3,720.14.
Asian markets finished mixed Wednesday. In Japan, the Nikkei index lost 0.71 points, or 0.01%, to close at 11,580.56. Banks led losers as Japan's 10-year bonds saw their sharpest fall in nearly a week. Analysts said trading was cautious as investors await the key Bank of Japan's Tankan business confidence survey, due out July 1, and the interest rate decision from the U.S. Federal Open Market Committee next week, says Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index gained 4.18 points, or 0.04%, to close at 11,849.77 powered by gains in China plays. China-related stocks rose after Premier Wen Jiabao said the government is confident of achieving a soft landing, easing concerns about an interest rate hike, says Standard & Poor's MarketScope.