Stocks Finish Lower

U.S. stocks closed lower Wednesday, as profit taking hit major indexes on the final trading day of what has been a strong third quarter for the market. An unexpected decline in the September Chicago purchasing managers index set the stage for modest losses.

Tech issues joined the broader market's retreat after earlier having outperformed.

At 12:36 p.m. ET Wednesday, the 30-stock Dow Jones industrial average was down 47.61 points, or 0.49%, to 9,694.59. The broad Standard & Poor's 500-stock index fell 4.63 points, or 0.44%, to 1,055.98. The tech-heavy Nasdaq composite index shed 2.20 points, or 0.10%, to 2,121.84.

On the New York Stock Exchange, 18 stocks were lower in price for every 13 that advanced. Breadth on the Nasdaq was 17-10 negative.

Treasuries were lower in price ahead of Federal Reserve Chairman Ben Bernanke's testimony Thursday on regulatory reform. The dollar index was lower. Gold futures were higher. Crude oil futures were up after the Energy Dept.'s weekly inventory report showed crude oil stocks rose 2.8 million barrels, gasoline stocks fell 1.6 million barrels, and distillate stocks rose 300,000 barrels.

Tech issues joined the broader market's retreat after earlier having outperformed.

The stock market had been in positive territory early in Wednesday's session after a report that revised second-quarter U.S. gross domestic product (GDP) fell a less than expected 0.7%, vs. the 1.0% drop estimated previously. First-quarter GDP dropped 6.4%.

Traders also weighed a larger than expected 254,000 drop in ADP's report on private payrolls for September.

Thursday brings data on the Institute for Supply Management's September index of manufacturing activity, weekly initial jobless claims, and personal consumption expenditures for August.

On Wednesday, Nike (NKE) shares rallied on news of a Goldman upgrade following the firm's better than expected earnings results.

Commercial lender CIT Group (CIT) was making a last ditch effort to reconcile with its creditors to avoid its demise.

In economic news Wednesday, the Chicago PMI dropped to 46.1 in September, well below expectations (median 51.0) from August's reading of 50.0. It interrupts the upswing over the last few months from the March low figure of 31.4. Among the components, the new orders index fell to 46.3, versus 52.5 in August. The production index dropped to 47.2, versus 52.9. The employment index nudged only marginally higher to 38.8, vs. 38.7.

The government reported a drop of 0.7% (annual rate) in real GDP in the second quarter, revised form the 1.0% decline reported a month ago. The revision is a slight surprise; the consensus had been for a downward revision to 1.3%. The revision to inventories was less than expected, and more than offset by upward revisions to business equipment, exports, and federal spending.

"The change was modest, but in the right direction and should thus be a minor boost to the market," says S&P Economics.

ADP reported that its survey indicates a drop of 254,000 in private payrolls in September, after a 277,000 (revised from 298,000) August decline. The drop is the smallest reported by ADP since July 2008.

In company news Wednesday, Nike posted first-quarter earnings per share (EPS) of $1.04, vs. EPS of $1.03 one year earlier, as cost cuts and lower taxes offset a 12% drop in revenue. Excluding changes in currency rates, the revenue drop would have been 7%. Wall Street was looking for $0.97 EPS.

Jabil Circuit (JBL) reported core EPS of $0.16, vs. core EPS of $0.30 one year earlier, on a 15% revenue decline. Wall Street was looking for EPS of $0.08.

Micron Technology (MU) posted a fourth-quarter loss per share of $0.10, vs. a $0.45 loss one year earlier, despite a 10% revenue decline. Wall Street was looking for a $0.19 loss.

Ameriprise Financial (AMP) inked a deal to acquire the long-term asset management business of Columbia Management from Bank of America (BAC) for approximately $1 billion in cash. Says transaction expected to be accretive to AMP's earnings and return on equity within one year, excl. one-time integration costs.

Eastman Kodak (EK) completed the previously announced issuance to Kohlberg Kravis Roberts & Co. L.P. (KKR) of $300 million in aggregate principal amount of 10.50% senior secured notes due 2017 and warrants to purchase 40 million Kodak common shares.

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