Stocks Inch Higher in Volatile Trading

Major indexes eked out an advance after a roller coaster ride on mixed economic signals and tumbling commodity prices

Stocks finished a see-saw session modestly higher Wednesday, as investors weighed mixed economic reports and falling commodity prices. Concerns over inflation or a potential economic slowdown weighed on sentiment, says Standard & Poor's Equity Research.

The Dow Jones industrial average edged up 18.97 points, or 0.17%, to 11,117.32, overcoming weakness in Boeing (BA) and Honeywell (HON). The broader Standard & Poor's 500 index added 1.99 points, or 0.16%, to 1,258.56. The tech-heavy Nasdaq composite rose 10.41 points, or 0.48%, to 2,169.17.

A pullback may lie ahead after the Federal Reserve concludes its tightening cycle, some analysts say. Bear Stearns lowered its year-end 2006 S&P 500 target to 1200 from 1350. "The post-Fed environment is typically marked by a prolonged correction, one that could last as long as a year," writes Francois Trahan, chief investment strategist at Bear Stearns.

Other analysts say ongoing volatility and high volume may signal an end in sight to the recent downtrend. "What we're going through here is a market that's seeking to establish a bottom," says Peter Cardillo, chief market analyst at S.W. Bach. "Volume is very strong today, and that's a good sign that we're probably nearing the end."

Investors were digesting surprising economic data Wednesday. Durable goods orders fell 4.8% in April, below the expected flat reading. April new home sales unexpectedly rose 4.9% to 1.2 million units. On Thursday, a second reading on first-quarter gross domestic product (GDP) and April figures for existing home sales are set to follow, while a report on personal savings, consumption and income will be in focus Friday.

In corporate news, Dow component General Motors (GM) gained after Merrill Lynch reportedly upgraded the automaker's stock from neutral to buy.

Earnings reports continued to trickle in. Cardiac-device maker Medtronic (MDT) was higher after the company said said fourth-quarter earnings almost quadrupled to $746.6 million.

Software developer VA Software (LNUX) fell after the company posted a third-quarter profit of $997,000, compared with a loss of $1.67 million a year earlier.

Elsewhere, pharmaceutical company Wyeth (WYE) was lower on news it received regulatory approval for an amendment to a settlement involving the withdrawn fen-phen diet drugs.

Also on the downside, XM Satellite Radio (XMSR) fell sharply after cutting its forecast for subscriber growth as it works through legal challenges from the music industry.

Technology supplier Avocent (AVCT) was higher after the company said it will buy back as many as 3 million shares to pay for part of its purchase of privately held LANDesk Group.

On the M&A front, Citigroup (C) was reportedly in talks to add Chinsese insurer China Life Insurance to its consortium to buy a stake in Chinese lender Guangdong Development Bank.

Among other stocks in focus, Internet telephone outfit Vonage (VG) was lower in its first day of trading on the New York Stock Exchange, after pricing late Tuesday at $17 a share.

In the energy markets Wednesday, July West Texas Intermediate crude oil futures closed down $1.90 at $69.86 a barrel, despite a weekly inventory report showing an unexpectedly large supply decrease. Traders focused on on higher gasoline inventories and weakness across commodities in general, says Action Economics.

European markets finished lower. In London, the Financial Times-Stock Exchange 100 index sank 91.6 points, or 1.61%, to 5,587.1. Germany's DAX index retreated 91.26 points, or 1.61%, to 5,587.23. In Paris, the CAC 40 index lost 61.51 points, or 1.25%, to 4,870.02.

Asian markets finished mixed. Japan's Nikkei 225 index rose 308 points, or 1.97%, to 15,907.2. In Hong Kong, the Hang Seng index slipped 41.92 points, or 0.26%, to 15,822.64. Korea's Kospi index added 3.52 points, or 0.26%, to 1,333.38.

Treasury Market

The Treasury market zigged and zagged like the stock market on the mix of economic data. Prices for 10-year Treasury notes edged lower to 100-23/32 with a yield of 5.03%, while 30-year bonds fell to 90-15/32 for a yield of 5.13%.