Stocks finished higher on Wednesday, boosted by strength in semiconductor and computer groups following strong outlooks from bellwethers Hewlett-Packard and Applied Materials, according to Standard & Poor's MarketScope. A bigger-than-expected jump in wholesale prices in July, however, has raised some concerns that inflation is growing. Oil prices tumbled, after a mixed weekly inventory report.
The Dow Jones industrial average rose 37.26 points, or 0.35%, to 10,550.71. The broader Standard & Poor's 500 index added 0.90 points, or 0.07%, to 1,220.24. The tech-heavy Nasdaq composite was up 8.09 points, or 0.38%, to 2,145.15.
In economic news Wednesday, the producer price index climbed 1% in July, showing the biggest jump in wholesale prices in nine months. Economists were expecting the index to rise by 0.5%, after staying flat in June. The core index, which excludes energy and food prices, rose 0.4%, above the consensus forecast of 0.1%, "indicating upward price pressures are not confined to the run-up in energy costs," Standard and Poor's Marketscope noted.
September West Texas Intermediate crude oil fell by more than $2 per barrel to under $64 following the weekly inventory report. The report showed a 300,000 barrel build in crude stocks, less than the 1 million build the market was expecting. Gasoline stocks, which were expected to fall 1.3 million barrels on the week, fell 5 million barrels, reflecting strong demand and refinery outages during the week, according to Action Economics.
After the close on Tuesday, Hewlett-Packard (HPQ) posted net income of $73 million, down 88% from the period last year, thanks to a charge of $988 million related to repatriating foreign earnings. Excluding that expense, however, the computer maker reported earnings of $1.1 billion, easily beating analysts' expectations.
Also late Tuesday, semiconductor tool maker Applied Materials (AMAT) said its profits fell 16% in the third quarter to $369.6 million, but said that it expected orders to increase by 5% to 10% in the fourth quarter.
Telecom Qwest Communications (Q) said that it reached a contract agreement with its largest union late Tuesday, preventing a strike by 25,000 workers in 13 states. Union members still have to ratify the contract, which includes a 7.5% pay increase over three years and other benefits.
Sprint Nextel (S) is preparing to acquire Nextel Partners (NXTP) in the coming weeks, according to a report by TheStreet.com. Nextel Partners, which provides wireless services using the Nextel brand name, may fetch as much as $30 a share, according to people familiar with the company.
After choppy trading following the stronger-than-expected producer price index report and volatile oil prices, long-dated Treasuries finished lower as profit-taking took over. The yield on the benchmark 10-year note was at 4.27%.
European stock markets finished lower on Wednesday. London's Financial Times-Stock Exchange 100 index fell 29.60 points, or 0.56%, to 5,292.70, following a report that the British July unemployment rate was unchanged at 2.8%.
Germany's DAX index fell 12.35 points, or 0.25%, to 4,871.46. Sartorius, a maker of laboratory equipment and technology, was among the decliners following a published report that the company is considering more acquisitions.
In Paris, the CAC 40 index dropped 4.94 points, or 0.11%, to 4,439.63 after a report that the French trade deficit for June was slightly higher than in May.
Asian markets ended mixed Wednesday. Japan's Nikkei 225 index fell 42.55 points, or 0.35%, to 12,273.12.
In Hong Kong, the Hang Seng index closed up 5.96 points, or 0.04% to 15,449.58.