Stocks finished with small gains on the heels of Tuesday's rally on the Federal Reserve's decision to leave rates unchanged and maintain an accommodative monetary stance.
The Dow Jones industrial average rose 26.2 points, or 0.27%, to 9,774.53. The broader Standard & Poor's 500 index gained 1.32 points, or 0.13%, to 1,048.11. The tech-heavy Nasdaq composite index edged up 4.3 points, or 0.22%, to 1,936.56.
The major averages struggled for direction for most of Wednesday's session. "The markets were cautious ahead of Thursday's jobless claims and third-quarter gross domestic product reports," says Standard & Poor's MarketScope.
Economists expect GDP to rise 5.8% in the third quarter. Economic research outfit MMS International sees much stronger consumption and export gains of 6.8% and 11%, respectively. Fixed investment growth should fall short of market forecasts, at 7%, and inventories should subtract a hefty $36 billion. The mix may prompt upward revisions in the median market forecast for fourth-quarter GDP, which now stands at 4.1%, says MMS.
Among stocks moving higher Wednesday were defense names, after Boeing (BA ) reported third-quarter earnings per share of 32 cents, vs. 46 cents a year ago and above analysts' forecast, on 4% lower revenue. The company raised 2003 revenue guidance to $50 billion on strong defense sales, and revised its EPS outlook to a loss of 2 cents to 12 cents (GAAP) to reflect its decision to end production of the 757 aircraft. The stock rose on the news.
Northrop Grumman (NOC ) shares climbed after the defense contractor reported third-quarter earnings per share from continuing operations of $1.21, vs. $1.17 a year ago and above analysts' forecast, on a 57% sales rise. It raised 2003 guidance for EPS from continuing operations to $4.20 to $4.30.
The group that hurt the S&P 500 the most was pharmaceuticals, led by a decline in Johnson & Johnson (JNJ ) after the FDA raised concerns about blood clotting associated with the company's drug-coated stent, according to Standard & Poor's MarketScope.
One stock falling sharply was Gilead Sciences (GILD ), which reported third-quarter earnings per share of 33 cents, vs. 10 a year ago, on a 50% total revenue rise. S&P says Viread sales of $115.4 million was below forecast.
Also suffering was Wild Oats Market (OATS ), after it said it sees a third-quarter loss of 3 cents per share (including items) on a slight same-store sales rise and 3.9% total sales rise.
Shares of Halliburton (HAL ) fell after the company reported third-quarter earnings per share from continuing operations of 21 cents, vs. 22 cents, despite a 39% revenue rise. The company sees at least 30 cents for fourth-quarter EPS.
CVS (CVS ) posted third-quarter earnings per share of 46 cents, vs. 40 cents a year ago, on 6.4% same-store sales rise and 8.5% higher total sales. CVS raised its quarterly dividend by 15%. The shares rose.
In other news, the latest round of merger talks between BellSouth (BLS ) and AT&T (T ) collapsed as BellSouth indicated it is unwilling to move forward with a deal due to price, reports the Wall Street Journal.
Thursday's earnings calendar includes releases by Exxon Mobil (XOM ), Ericsson (ERICY ), BMC Software (BMC ), Aetna (AET ), Simon Property Group (SPG ), and Waste Management (WMI ).
Treasuries erased most of their post-FOMC relief rally from Tuesday, faltering on supply, second thoughts about the benign growth and policy outlook, and some hedge-lock selling, says MMS International. The $26 billion 2-year note auction was better than expected, says MMS. There were no major economic data releases.
European stock markets were mixed. London's Financial Times-Stock Exchange 100 index fell 7.2 points, or 0.17%, to 4,265.7 as government issues economic forecasts that shows growth but still high inflation.
In Paris, the CAC 40 was up 14.8 points, or 0.4%, to 3,366.95. Germany's DAX index rose 28.49 points, or 0.79%, to 3,615.42 following Tokyo's overnight surge. The market was restrained, however, by a EU report that sees German GDP unchanged this year and up 1.6% next year.
Asian markets finished higher Wednesday. In Japan, the Nikkei 225 index gained 178.22 points, or 1.69%, to close at 10,739.22. Japan's September industrial production rose 3% month-to-month, beating expectations. Furthermore, first-half earnings reports by Japanese high-tech companies during the session were better than expected.
In Hong Kong, the Hang Seng index rose 38.63 points, or 0.32%, to close at 12,130.51.