Stocks finished mixed Tuesday as oil prices plummeted by more than a dollar. Investors, however, appear to be biding their time ahead of the Federal Reserve's interest rate-setting meeting on Wednesday.
The Dow Jones industrial average finished down 4.94 points, or 0.05%, to 10,386.37. The broader Standard & Poor's 500 index was down 0.81 point, or 0.07%, to 1,164.08. The Nasdaq composite index rose 4.08 points, or 0.20% to 2,043.33.
This week's key event is the Federal Open Market Committe (FOMC) meeting on Wednesday. Economists expect the Fed to raise its key interest rate by 25 basis points, to 2%. The median estimates now indicate the FOMC won't be taking a break in December, pushing the Fed funds target rate to 2.25% at yearend, says Action Economics.
"The projected quarter-point hike would elevate the Fed funds rate above the CPI core rate of inflation for the first time since the 9-11 terrorist attacks," says Michael Wallace at Action Economics.
Later in the week, there will be plenty of economic reports to watch. Wednesday brings the trade report and weekly jobless claims. Updates on October retail sales, University of Michigan consumer sentiment, and business inventories will come on Friday. (The bond market will be closed Thursday for Veterans' Day.)
Further ahead on the earnings calendar, look for Starbucks (SBUX) and Federated Department Stores (FD) on Wednesday; and Dell (DELL), Agilent (A), Target (TGT), Kohl's (KSS), and Tiffany (TIF) on Thursday.
In the energy markets Tuesday, December NYMEX crude oil, which has been in a downtrend since hitting $55.57 on Oct. 25, dropped $1.77 to $47.32 per barrel, the lowest price since September, as traders positioned themselves for Wednesday's inventory reports. A weekly report from the Dept. of Energy is expected to show crude oil stocks rose 1 million to 3 million barrels.
Traders were eying the latest government probes of blue-chip names. According to press reports, the Federal criminal investigation of Boeing's (BA) dealings with the U.S. Air Force is branching out to include aspects of the $100 billion program it is overseeing for the U.S. Army, according to people familiar with the matter. Boeing shares traded 1.33% higher.
Meanwhile, Merck (MRK)says the SEC is commencing an informal inquiry on Vioxx. The company received a Justice Dept. subpoena requesting information on research, marketing, and selling activities for Vioxx in a federal health care investigation under criminal statutes. The stock dropped 2.1%.
The California Insurance Commissioner dropped his objections to Anthem's (ATH) planned acquisition of Wellpoint Health Networks (WLP) for $16 billion, after Anthem agreed to improve its policies for underserved communities. Anthem shares jumped 5.9%, while Wellpoint's was up 8.9%.
In earnings news, Cisco Systems (CSCO) will report third-quarter earnings after the close of trading Tuesday.
Liberty Media (L) posted a huge gain in quarterly profits, up to 13 cents per share, vs. 1 cent a year ago. The gain largely results from the media conglomerate's acquisition of shopping network QVC. The stock went up 2.1%.
The world's largest insurance broker, Marsh & McLennan (MMC
announced that third-quarter earnings were down to 4 cents per share, vs. 65 cents a year ago, and that it will cut 5% of its worldwide workforce. The insurer said it made significant cuts in order to provide reserves for potential settlements relating to New York State's legal action against the company. Shares moved 1.6% lower.
May Department Stores (MAY) posted 2 cents per share in third-quarter earnings, vs. average analyst estimates of 8 cents a share., citing disappointing sales of dresses and home furnishings. May traded down 0.6%.
Cablevision (CVC) reported a boost in revenue and subscriber growth in its TV and data division, and projected that the gains would continue until the end of the year. Shares rose 2.4%.
Prices of U.S. Treasuries were higher Tuesday as some investors put profits from oil holdings into Treasuries, says Action Economics. Traders took in a report showing that U.S. wholesale sales rose 0.6% on September, exceeding expectations by 0.1%. Wholesale inventories rose 0.5%, in line with estimates. These figures are expected to have little impact on the economic outlook as the market awaits Wednesday's Fed meeting, according to Action Economics. The benchmark 10-year note yield remained at 4.22% while oil prices fell.
Meanwhile, the U.S. dollar, which was hammered last week, continued its small recovery, hitting $1.28 vs. the euro.
European stock markets finished mixed Tuesday after a move lower late in the session. London's Financial Times-Stock Exchange 100 index was up 1 point, or 0.02%, to 4,718 as the U.K. trade deficit shrank due to increased exports.
Germany's DAX index lost 4 points, or 0.1%, to 4,065 despite declining oil prices. In Paris, the CAC 40 index fell 7 points, moving to 3,770.
In Asia, the markets finished modestly lower on Tuesday. Japan's Nikkei 225 index fell 19 points, or 0.2%, to 10,964, hurt by losses in the banking and insurance sectors. In Hong Kong, the Hang Seng index lost 45 points, or 0.3%, to 13,516.