Major stock indexes closed lower Wednesday, as a drop in oil prices and improved first-quarter GDP reading failed to create buying momentum after Tuesday's rally. Trading was cautious ahead of Thursday's Federal Reserve policy announcement, according to Standard & Poor's MarketScope. A 6% jump in software maker Oracle, which reported stronger than expected earnings, helped limit losses in the Nasdaq.
The Dow Jones industrial average lost 31.15 points, or 0.39%, to 10,374.48. The broader Standard & Poor's 500 index finished down 1.72 points, or 0.14%, to 1,199.85. The tech-heavy Nasdaq composite slipped 1 point, or 0.05%, to 2,068.89.
Looking ahead to Thursday, the major event for the markets will be the announcement by the Federal Open Market Committee, the Federal Reserve's policy-setting arm at the close of the FOMC's two-day meeting. S&P economists expect the Fed to raise the Fed funds target rate a quarter of a percentage point to 3.25%.
Also on Thursday, the June Chicago purchasing managers' index is due out. The median forecast of economists is for a reading of 54.3, up from the May reading of 54.1, said Action Economics.
Among the companies on Thursday's earnings calendar are palmOne (PLMO ), maker of Treo smart phones, and ConAgra Foods (CAG ).
On Wednesday, the Commerce Department reported that U.S. gross domestic product rose at a 3.8% annual rate, higher than the earlier estimate of 3.5%.
August crude oil per barrel settled down 94 cents to $57. 26 per barrel on the New York Mercantile Exchange, after Wednesday's weekly Energy Information Administration inventory report showed an unexpected 1.1 million barrel rise in crude stocks. Supplies were expected to fall by 1.4 million barrels, according to Action Economics. Stocks of gasoline and distillates also rose more than expected.
In earnings news, software maker Oracle (ORCL ) reported better-than-expected fourth-quarter earnings of $1.02 billion up from $990 million, in the period last year. The company's revenue in the period rose by 26% to $3.88 billion.
Cereal maker General Mills (GIS ) Wednesday said its fourth-quarter earnings grew 65% on the period last year, thanks in part to gains on the sale of the company's stake in two units. The reported net income of $460 million, however, was lower than analysts expected.
Agricultural products company Monsanto (MON ) said its third-quarter earnings dropped 81%, to $47 million, because of a $248 million charge relating to acquisitions.
Shares of Dow component American International Group (AIG ) rose a day after the insurance group said first quarter net income rose to $3.68 billion from $2.56 billion in the period a year ago.
The initial public offering of shoe retailer DSW (DSW ) on the New York Stock Exchange surged 27% to $24.24. The company placed 14.1 million shares at $19.
Treasuries ended the day lower, after giving back early gains they had made in response to the GDP data showing that the personal consumption expenditure gauge fell. The yield on the benchmark 10-year note was at 3.98%.
European stock markets closed higher Wednesday.
London's FTSE 100 index gained 18.70 points, or 0.57%, to 5,109.10. Broadcaster ITV was higher after British regulators ruled that ITV and network Five will have their analog license fees cut by half this year as viewers switch to digital reception.
In Germany, the DAX index added 26.17 points, or 0.57%, to 4583.63. Deutsche Telecom was higher, apparently in sympathy with news that France Telecom plans to raise its dividend payment, and chipmaker Infineon was higher after Credit Suisse First Boston raised its rating to neutral from underperform.
In Paris, the CAC 40 index finished up 37.55 points, or 0.90%, to 4,231.88, as French May producer prices fell 0.3%, mainly because of a decline in energy prices. Several stocks rose on news that the French government plans to sell stakes in three government highway companies to reduce France's debt. Construction group Vinci, which has an interest in one of the companies, Autoroutes du Sud, was among the gainers.
Asian markets finished mixed Wednesday. In Japan, the Nikkei index gained 63.61 points, or 0.55%, to 11,577.44. Exporters led stocks higher, after the U.S. June consumer confidence rose and the dollar strengthened against the yen.
In Hong Kong, the Hang Seng index fell 10.16 points, or 0.07%, to 14,277.28, as losses in large-cap names such as HSBC Holdings and Hutchinson Whampoa weighed on the index.