Stocks finished modestly lower Wednesday, failing to build on Tuesday's bargain-hunting rally despite the Federal Reserve's moderately upbeat Beige Book report. Oil prices climbed on a bullish inventories report, while investors also looked ahead to Friday's payrolls report for further clues about the economy.
On Wednesday, the Dow Jones industrial average slipped 15.14 points, or 0.12%, to 12,192.45, despite a 1.9% gain by Hewlett-Packard (HPQ). The broader Standard & Poor's 500 index fell 3.44 points, or 0.26%, to 1,391.97. The tech-heavy Nasdaq composite shed 10.5 points, or 0.44%, to 2,374.64.
NYSE breadth was flat, with as many issues advancing as declining. Nasdaq breadth was 18-13 negative.
The market's recent turbulence could be more noise than substance, some analysts maintain. "The sharp decline in share prices has enhanced the already attractive valuation of the S&P 500, as has the decline in bond yields," says Abby Joseph Cohen, chief U.S. investment strategist at Goldman Sachs, in a note to clients. "Commentators have provided long lists of possible catalysts, both domestic and global... but U.S. fundamentals have changed very little."
Other analysts remained skeptical despite Tuesday's rally, citing technical factors. "Enough damage has been done to the daily and weekly charts to cause us to be suspicious of Tuesday's move as being a one-day wonder," notes Roger Volz, chief technical analyst at Swiss American Securities.
In economic news Wednesday, the Fed's Beige Book report showed moderate growth in most districts, despite "some slowing" in about a third of regions. The report is consistent with the Fed keeping interest rates steady, says Action Economics.
Treasury Secretary Henry Paulson reiterated his forecast of stable growth for the U.S. economy during remarks in Seoul, South Korea, according to a Reuters report. Paulson added that world economic fundamentals were strong despite fluctuations in global equity and foreign exchange markets, South Korea's financial ministry said in a statement.
Former Fed Chairman Alan Greenspan was also back in the headlines. Greenspan suggested the U.S. housing market has experienced an "inventory recession" but that the home sales decline has reached bottom, according to wire reports.
Meanwhile, the ADP National Employment Report said U.S. private nonfarm employment grew 57,000 in February to 115,111, following a downwardly revised 121,000 gain in January. The numbers don't change an expectation Friday's nonfarm payrolls report will show an increase of 90,000, says Action Economics.
The economic calendar is light Thursday, highlighted by weekly jobless claims data ahead of the payrolls release on Friday.
Among Wednesday's stocks in the news, Toll Brothers (TOL) was higher after the homebuilder said it may "burn off" its inventory in four or five months in most of its markets.
Take-Two Interactive (TTWO) was higher on news investors who own 46% of the video-game maker are joining in an attempt to take over its board and ask for a new CEO.
Citigroup (C) was modestly lower after running into a hurdle in its bid for Japan's Nikko Cordial. Harris Associates, which owns about 7.5% of the brokerage, said it won't accept Citigroup's bid.
Google (GOOG) was modestly lower even after UBS raised its recommendation on the Internet search company from neutral to buy.
Shares of Kellogg (K) gained after Goldman Sachs upgraded the the cereal maker from neutral to buy.
On the earnings front, American Eagle Outfitters (AEOS) was lower despite reporting a 40% jump in fourth-quarter net income.
Payless ShoeSource (PSS) was sharply higher after the discount shoe retailer said it swung to a fourth-quarter profit.
Shares of Saks (SKS) climbed after the department store operator posted a fourth-quarter profit, up from a year-ago loss, on a 17% increase in sales.
Companies set to report quarterly results after the closing bell Wednesday included TiVo (TIVO).
In the energy markets, April West Texas Intermediate crude oil futures rose $1.13 to $61.82 a barrel, after a weekly inventory report showed crude supplies unexpectedly fell.
European markets finished modestly higher. The FTSE-100 index in London rose 18 points, or 0.29%, to 6,156.5. Germany's DAX index added 22.75 points, or 0.34%, to 6,617.75. In Paris, the CAC 40 index was up 17.94 points, or 0.33%, to 5,455.07.
Asian markets ended mixed. In Japan, the Nikkei 225 index lost 79.88 points, or 0.47%, to 16,764.62. In Hong Kong, the Hang Seng index declined 139.92 points, or 0.73%, to 18,918.64. Korea's Kospi index gained 8.02 points, or 0.57%, to 1,410.95.
Treasury prices moved higher late in the session, after the Fed's Beige Book indicated evidence of slowing economic growth in some districts. The 10-year note rose in price 08/32 to 101-00/32 for a yield of 4.5%, while 30-year bonds climbed 12/32 to 101-26/32 for a yield of 4.64%. Trading could be slow Thursday ahead of Friday's payrolls report, says S&P.