Stocks ended Wednesday's session mixed, with the Dow Jones Industrial Average posting a slight loss after giving up earlier gains as investors took profits.
The Dow was dragged lower by late selling in industrial stalwarts United Technologies (UTX ) Caterpillar (CAT ), General Electric (GE ) and General Motors (GM ).
With the Dow missing in action, the tech sector provided virtually all the leadership on Wednesday. The Nasdaq Composite posted solid gains on a wave of positive sentiment unleashed by an upgrade of stocks in the semiconductor group by Merrill Lynch analysts.
In economic news, the National Association of Purchasing Managers (NAPM) Manufacturing Index for July eased to 43.6%, well below the 44.7% median forecast and June result, with the new orders component of the index slipping to 46.3 from 48.6 -- marking the 12th consecutive decline. Inventories dipped to 35.8 from 40.8 and prices paid eased to 38.7 from 42.3. This follows a string of weak manufacturing reports, including the latest Philadelphia Fed Index, durable goods orders and the Chicago Purchasing Managers releases. An NAPM spokesman warned that the sector "appears to lack the drivers to stimulate recovery" -- bullish news for U.S. Treasuries but bearish for the dollar and stocks, according to Standard & Poor's MMS.
The NAPM report tempered earlier buying activity. "Stocks got off to a good early start with some upgrades in the semiconductor industry," notes A.C. Moore, chief investment strategist at Dunvegan Associates. "But the NAPM report may have provided somewhat of a reality check for traders and resulted in second thoughts about the lift today."
Moore says that in the near term, Friday's employment report, scheduled for release at 8:30 a.m. ET, will help determine market direction. He expects a negative impact from revised GDP numbers, which he expects to be moved lower. Following that, the strategist sees better corporate news. "I think the next thing we'll see is some signal by a big company that things have bottomed and are turning around and might have been too negative in their guidance."
Among Wednesday's stocks in the news, Priceline.Com (PCLN ) posted its first profit, earning $0.05 per share (pro forma) for the second quarter on a 3.6% revenue rise. The company also raised third quarter guidance, forecasting $0.05-$0.07 Q3 EPS (basic, pro forma) on revenues exceeding the year ago's $341 million in revenue.
Meanwhile, the board of USX Corp. approved the tax-free spin-off of USX-US Steel (X ) -- now designated as a "tracking stock" -- into a publicly traded company. The remaining energy business of USX will continue to operate as Marathon Oil Corp.
The Dow Jones Industrial Average ended lower by 12.80 points, or 0.12%, to 10,510.01. The tech-heavy Nasdaq gained 41.25 points, or 2.03%, to 2,068.38. The broader S&P 500 Index gained 4.70 points, or 0.39%, to 1,215.93.
U.S. Treasuries ended lower in price in Wednesday's session. But Treasuries did find their way off lows as stocks faltered into the close. To some extent last minute revisionism after weak Chicago PMI yesterday blunted the impact of the lower 43.6% NAPM result. In addition, some signs of inventory stabilization were evident in the manufacturing survey. Construction spending declined 0.7% and domestic auto sales braked as well. The two-year note garnered a late safety bid as Argentina markets convulsed again on domestic capital flight. World Markets
European markets ended mixed. In London, the Financial Times 100 Index was up 17.80 points, or 0.32%, to 5,546.90. France's CAC 40 Index gained 26.97 points, or 0.53%, to 5,112.48. But Germany's DAX Index shed 18.27 points, or 0.31%, to end at 5,842.92.
Asian markets closed higher following a rally on Wall Street Tuesday. The Nikkei gained 98.56, or 0.83%, to close at 11959.33. In Hong Kong, the Hang Seng added 162.05, or 1.32%, to close at 12478.74.
By Alan Hughes in New York