Stocks finished higher Wednesday, as oil prices shifted sharply lower on positive inventory data. Traders also weighed a disappointing durable goods orders report, continued concern over the outcome of next week's U.S. Presidential election, and upwardly-revised earnings guidance from blue-chip Boeing (BA).
The Dow Jones industrial average closed up 113.55 points, or 1.15%, to 10,002.33. The broader Standard & Poor's 500 index was up 14.31 points, or 1.29%, to 1,125.40. The Nasdaq composite index gained 41.20 points, or 2.14%, to 1,969.99, as select Internet, chip and biotech stocks made gains.
Up ahead Thursday: a read of initial jobless claims, and quarterly earnings reports from ExxonMobil (XOM) and Gillette (G).
Oil prices fell to $52.46 per barrel Wednesday after better-than-expected inventory data arrived from the Department of Energy (DOE) and the American Petroleum Institute (API). The DOE reported a crude oil inventory rise of 4 million barrels, and API announced a 4.4 million rise.
Market players should keep their wits about them as the price of oil see-saws: "I don't know that this whole move higher in oil prices is suddenly extinguished on a random Wednesday in October," says Larry Wachtel, market analyst at Prudential Securities. Just because "this market takes its marching orders from oil" doesn't mean that good earnings from the likes of Cardinal Health (CAH) should always come second to the viscous commodity's price.
In economic news Wednesday, September durable goods orders rose 0.2% to $195.7 billion, vs. a 0.6% drop in August. Defense orders, which rose 26.5% in the month, accounted for most of the headline rise; excluding defense, orders fell 0.9%.
A read of U.S. September new home sales was better than expected. New home sales rose 3.5% to a 1.206 million unit pace.
In earnings news Wednesday, aerospace giant Boeing reported third quarter earnings per share (EPS) of 56 cents, vs. 32 cents one year earlier, on revenue of $13.2 billion. Boeing also upwardly-revised its 2004 EPS guidance. Shares were slightly higher.
Cardinal Health gained 21% after posting a fourth-quarter EPS of 91 cents vs. 79 cents from continued operations on an 11% revenue rise. The maker of health care products expects an EPS decline of as much as 15% in the first half of 2005. S&P upgraded the shares to hold.
Cable TV operator Comcast (CMCSA) posted third quarter EPS of 10 cents, vs. $1.41, as the absence of a gain on its discontinued operations offset a 12% revenue rise. Comcast reaffirmed its 2004 revenue forecast for 10% growth. S&P reiterated its hold rating. Comcast shares were higher.
Household products-related stocks were suffering as Procter & Gamble (PG) moved 2.6% lower. The company posted a first quarter EPS of 73 cents, vs. 63 cents, on a 13% sales rise, but didn't raise its fiscal 2005 guidance. S&P reiterated its buy rating.
Meantime, consumer products company Unilever (UN) fell even after posting a third quarter EPS of 91 euro cents vs. 85 euro cents despite a 4% revenue drop. Unilever says it's dissatisfied with its performance, and that actions are being taken to improve the market competitiveness of its products.
Insurance company AFLAC (AFL) reported a third-quarter EPS of 58 cents, vs. 45 cents on total revenue of $3.3 billion. The company was 4.6% lower, as it expects to miss its 2004 U.S. sales goals. S&P upgraded shares to hold from avoid, while Prudential downgraded AFLAC to neutral.
Veritas Software (VRTS) posted third-quarter EPS of 22 cents vs. 15 cents (GAAP) on an 11% rise in revenue. S&P reiterated its buy rating. Veritas was 4.1% higher.
RF Micro Devices (RFMD) posted a second quarter loss of 4 cents, vs. 5 cents on 8.8% lower revenue. The company expects loss of 2 cents to breakeven results (including items) for its next quarter. Shares were 4.9% higher.
The earnings calendar for the rest of the week remains busy. On Friday, Bristol-Myers Squibb (BMY) and ChevronTexaco (CVX) report.
The rest of the week's economic news focuses on Friday's key report: the advance reading for third-quarter gross domestic product. Economists expect GDP growth for the quarter to come in at 4.3%.
Treasury prices fell Wednesday as money moved back to equities when crude oil prices dipped below $53. The 10-year yield rose 10 basis points to 4.09%.
The dollar made small gains vs. major currencies Wednesday. The euro was worth $1.271, the British pound sterling was at $1.831 and the dollar was at 106.61 yen.
European stock markets finished higher Wednesday. London's Financial Times-Stock Exchange 100 index gained 46.7 points, or 1.02%, to end at 4,630.10. Investors showed little reaction to a report that U.K. mortgage approvals declined for a third month, notes MarketScope. Traders await the U.K's Nationwide house price index on Thursday for the latest gauge on the extent of the property market cool down, notes Action Economics.
Germany's DAX index gained 66.77 points, or 1.73%, to close at 3,929.03. France's CAC-40 index added 58.91 points, or 1.63%, at 3,678.39.
Asian markets met mixed results on Wednesday. Japan's Nikkei average gained 19.49 points, or 0.18%, to end at 10,691.95. Exporters such as Toyota Motor finished higher, but the another strong earthquake in northern Japan -- and felt in Tokyo -- capped overall gains.
In Hong Kong, the Hang Seng index lost 13.64 points, or 0.11%, to end at 12,838.71.