A profit warning from Motorola and higher oil prices held down prices, as investors debated the Fed's next move and the Senate heard testimony on subprime loans
Stocks finished mixed Thursday, as higher oil prices and a profit warning from Motorola (MOT) put pressure on prices after Wednesday's Fed-inspired rally.
The Dow Jones industrial average rose 13.62 points, or 0.11%, to 12,461.14. The broader Standard & Poor's 500 index edged down 0.50 point, or 0.03%, to 1,434.54. The tech-heavy Nasdaq composite lost 4.18 points, or 0.17%, to 2,451.74.
Traders debated if the Federal Reserve's policy announcement yesterday translates into interest rate cuts in the near term, says Standard & Poor's Equity Research. Fed officials avoided policy references in talks today. Investors also watched theatrics of the Senate committee hearing on subprime loans, where a Fed official said the banking industry is sound, says S&P.
Looking ahead to Friday, the existing home sale report is expected to show a drop to 6.3 million units in February. Higher sales in January sets the stage for a pullback in February, says Action Economics. The storm-infested month of February is likely to reveal an even more pronounced weather effect than January, making it difficult to gage the underlying trend in housing, says Action Economics.
In economic news Thursday, there was little reaction to a 4,000 drop in Initial Jobless Claims. The Conference Board's Leading Economic Indicators dropped to -0.5% from +0.1% in January. The economy is likely to remain on a rocky path for several more months as the battered housing industry struggles to regain its feet, says S&P.
Among stocks in the news, Motorola lowered its earnings forecast; it sees 7-9 cents first-quarter GAAP loss per share on $9.2-$9.3 billion in sales. The mobile phone maker named Greg Brown as president and COO; Thomas Meredith is acting CFO. The company also raised its stock repurchase program to $7.5 billion. RBC Capital downgraded the stock to sector perform on the news.
KB Home (KBH) posted better-than-expected first-quarter earnings per share of 34 cents, vs. $2.01 a year ago, on 19% lower consolidated revenues. The home builder says despite recent improvement in first-quarter net orders and lower cancellation rate, these trends should be viewed with caution.
Intuit (INTU) shares fell after it said that total TurboTax federal units sales rose 1% year-over-year for the tax season-to-date through Mar. 17.
Private equity firm Blackstone Group confirmed earlier reports circulated this week that it is planning to raise up to $4 billion in an IPO.
In the energy markets, May NYMEX crude oil jumped $2.06 to $61.67 a barrel. Wednesday's reported drop in gasoline stocks continued to support prices on Thursday, though gasoline prices themselves, while about 2.5 cents a gallon higher, remained shy of Monday's seven-month peaks of $1.9850, says Action Economics.
European markets finished higher. In London, the FTSE-100 index rose 61.2 points, or 0.98%, to 6,318. Germany's DAX index jumped 144.9 points, or 2.16%, to 6,856.96. In Paris, the CAC 40 index was up 96.19 points, or 1.75%, to 5,598.37.
Asian markets posted strong gains Thursday. In Japan, the Nikkei 225 index jumped 256 points, or 1.49%, to 17,419.2. In Hong Kong, the Hang Seng index climbed 173.84 points, or 0.89%, to 19,690.25.
Treasury yields rose, with the long end continuing to get hit as the Fed's downgrade on the economy was paired against its upgrade on inflation risks, which prompted selling of bonds, says Action Economics. The 10-year note yield spiked up to 4.589%.