Stocks Finish Mixed
Stocks finished mixed on Wednesday, as blue chips suffered from higher oil prices, poor earnings, and a weaker U.S. dollar overseas. The Nasdaq got a small lift from strength in semiconductor stocks.
The Dow Jones industrial average fell 10.69 points, or 0.11%, to 9,866.93, led lower by Honeywell (HON ) as its December-quarter outlook missed expectations. The broader Standard & Poor's 500 index edged up 0.43 point, or 0.04%, to 1,103.66. The tech-heavy Nasdaq composite index rose 10.07 points, or 0.52%, to 1,932.97.
On Wednesday, financial stocks were weak amid earnings reports and news that Citigroup (C ) ousted its Vice Chairman and two other senior executives in connection with a recently disclosed scandal involving its private-banking operations in Japan. However, the broader market found support from a rebound in basic materials stocks that fell Tuesday, strength in the energy sector, and a rise in gold stocks as the dollar fell to multi-lows against the euro and yen.
In the energy markets, November NYMEX crude settled up $1.63 at $54.92 per barrel, after ranging between $53.23 and $55.20 (13 cents shy of all-time highs) in New York trading. Weekly EIA inventory statistics got the bulls going, as crude stocks, forecast to have risen over 2.0 million barrels, actually only rose 1.2 million barrels.
Up ahead in economic news on Thursday: an update on manufacturing activity from the Philadelphia Fed, leading economic indicators, and jobless claims.
Thursday's earnings calendar is very heavy, and includes companies such as Microsoft (MSFT ), Amazon.com (AMZN ), American International Group (AIG ), AT&T (T ), Caterpillar (CAT ), Coca-Cola (KO ), Eli Lilly (LLY ), Guidant (GDT ), Hershey Foods (HSY ), MBNA (KRB ), Merck (MRK ), PeopleSoft (PSFT ), and Xerox (XRX ).
After Wednesday's market close, results came from eBay (EBAY ), Computer Associates (CA ), and biotech company Amgen (AMGN ).
After Tuesday's close, mobile-phone company Motorola (MOT ) announced third-quarter profits that exceeded expectations. The chip maker posted earnings of 20 cents per share, vs. 5 cents last year, on a 26% rise in sales. However, Motorola also forecast slower growth in the fourth quarter and lowered its guidance. The stock fell 7.6%.
Financial services firm, J.P. Morgan Chase (JPM ), reported a third-quarter profit of 39 cents per share, vs. 78 cents. The quarter includes charges related to its recently-completed merger with Bank One. Shares dropped almost 2%.
Dow Jones component Honeywell (HON ) reported third-quarter earnings of 43 cents per share, vs. 40 cents, on an 11% rise in sales. Shares traded 4.6% lower.
Eastman Kodak (EK ) announced earnings of 63 cents per share (79 cents before restructuring charges) vs. 86 cents a share last year. Although this exceeded estimates, Standard & Poor reiterated its recommendation to avoid the stock. Kodak shares lost 9.4%.
Whirlpool (WHR ) was down 3.7% after posting third-quarter earnings per share of $1.50, vs. $1.48, on a 6.6% sales rise. The company noted the negative impact of raw material cost increases and higher oil prices.
Office Depot (ODP ) posted a third-quarter EPS of 28 cents, vs. 29 cents, as higher expenses and costs offset flat worldwide same-store sales and a 2.9% total sales rise. The stock was up 6.7%.
Fannie Mae (FNM ) says that the U.S. Securities and Exchange Commission has initiated a formal order of investigation of the nation's largest mortgage lender. Standard & Poor reiterated its avoid rating. Shares fell slightly.
Electronic Arts (ERTS ) posted second-quarter earnings of 31 cents, vs. 25 cents, on a 35% revenue rise. S&P cut its estimates, but reiterated its accumulate rating on the stock. The stock fell by 4%.
In economic news, the MBA's market index of new mortgage applications rose 7.9% to 709.9. Greater demand for mortgages accompanies a second week of declining rates, with the average rate on 30-year fixed mortgages down five basis points in the week to 5.64%, reports Informa Global Markets.
Treasury yields dove again on Wednesday, with the 10-year note nosing back under 4.0% to 3-week lows as more short-covering by the bearish majority combined potently with a litany of other positive factors with 2-weeks to go into a neck-and-neck national election, says Action Economics. A sharp rebound in oil, allocation out of stocks, a formal investigation by the SEC into Fannie Mae books and widening insurance scandal all helped fan interest in safe and secure Treasuries, says Action Economics.
European stock markets finished lower on Wednesday, as the U.S. dollar shed value, raising profit margin fears. London's Financial Times-Stock Exchange 100 index was down 40.1 points, or 0.86%, to 4,615.1.
Germany's DAX index was off by 51.73 points, or 1.3%, to 3,912.4. France's CAC-40 index has lost 37.57 points, or 1.02%, to 3,662.99.
Asian markets finished sharply lower Wednesday. Japan's Nikkei average slipped 182.68 points lower, or 1.65%, to 10,882.18, as steel and tech stocks declined. In Hong Kong, the Hang Seng index fell 155.42 points, or 1.18%, to close at 12,999.13.
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