) chairman Andy Grove that the recovery within the semiconductor sector still has not emerged. His comments initially put pressure on technology shares, though the sector subsequently pulled into the black.
The Dow Jones industrial average was up 15 points, or 0.18%, to 8,589.35 The tech-heavy Nasdaq composite gained 5.75 points, or 0.41%, to 1,396.51. And the broader S&P 500-stock index added 0.49 point, or 0.05%, to 904.94.
Following two rough weeks in the market, analysts are debating whether the rally has ended or will continue. "Equities are struggling, but a drop to a new low is not in the cards," says The Bank Credit Analyst in a report to clients. Trip Jones, senior vice president of Fulcrum Global Partners, says the economy remains in the "soft spot" that Alan Greenspan spoke of during his last speech in November.
On Wednesday, investors didn't have any significant economic data to mull. Looking ahead, however, a report from the Commerce Dept. Thursday is expected to show that the aggregate monthly retail sales for November increased 0.6%, while the figure excluding cars is expected to rise 0.4%. If the sales number comes in on target, it might spark another rally in the market. "On net, the data are expected to suggest that the consumer remains resilient, especially given that such a gain in ex-autos would follow the impressive 0.7% gain in October," economic research group MMS International says.
MMS expects initial jobless claims for the first week of December to rise 15,000 to 370,000. Last week's report came as a bit of a shock, as initial claims fell to the lowest level since February. But the drop was likely tied to the Thanksgiving holiday, which tends to induce distortions in the reported figures. "As such, the bounce back expected for the most recent survey week is mostly seen as an offset. Overall, the lean levels of initial claims seen over the past several weeks suggest that business have slowed the pace of layoffs," MMS notes.
The corporate earnings calendar was also light on Wednesday. But companies have been vocal nonetheless. Paper giant Kimberly-Clark (KMB
) set the tone by guiding analysts' earnings expectations lower early Wednesday morning. The company said diaper sales were weaker than expected - perhaps because more-conscious families are buying cheaper varieties. Merrill Lynch cut its 2003 earnings estimates for the company.
Telecommunications company Sprint (FON
) plans to eliminate another 2,100 jobs, or about 2.8% of its work force, the company said.
In the defense sector, shareholders of Northrop Grumman (NOC
) approved its planned merger with competitor TRW (TRW
Elsewhere in defense, Raytheon (RTN
) replaced Chief Financial Officer Frank Caine with Controller Edward Pliner two weeks after the Securities and Exchange Commission sanctioned Caine for violating a rule barring selective disclosure of material company information.
Other stocks in the news Wednesday included pharmaceutical wholesaler AmerisourceBergen (ABC
). UBS Warburg reports that hospital giant Tenet Healthcare (THC
) has pulled its $450 million annual pharmaceutical distribution contract from AmerisourceBergen and will begin using McKesson (MCK
) beginning early 2003. According to Tenet, price and service considerations drove its decision, UBS said.
Meanwhile, restaurant operator Yum! Brands (YUM
) confirmed its earnings for 2002 and Dow Jones (DJ
), publisher of the Wall Street Journal, announced strong November ad sales and nudged its fourth quarter earnings guidance higher.
In the financial sector, insurance giant Met Life (MET
) said it sees higher-than-expected earnings in 2003, while Bank of America (BAC
) agreed to buy 24.9% of Santander Central Hispano's Mexican bank for $1.6 billion in cash.
And investors got conflicting news from the health insurance sector. Aetna (AET
), the No. 2 health insurer, Wednesday said it will cut 690 jobs, or nearly 2.5% of its work force, and take a $30 million charge in the fourth quarter as it seeks to bring down costs amid a decline in membership. WellPoint Health Networks (WLP
), however, confirmed its strong earnings guidance for 2003.
On Thursday, Ciena (CIEN
) releases its fourth quarter earnings, as does Adobe Systems (ADBE
); while AutoZone (AZO
) releases fiscal first quarter earnings and Heinz (HNZ
) reports fiscal second quarter figures.
U.S. Treasuries rose higher in price Wednesday. "Gains were pretty substantial along the curve," said MMS. "Stocks vacillated in and out of the red, helping bonds to leech some early momentum from their rivals."
The yield on the 10-year Treasury note dipped below 4% today for the first time in three weeks, Economy.com noted. "The yield had risen as high as 4.26% on the day before Thanksgiving but has slowly fallen in recent weeks as the stock market rally falters," Economy.com's Andy Kish wrote.
European markets traded higher Wednesday. In London, the Financial Times-Stock Exchange 100 index finished up 49.9 points, or 1.27%, to 3,974.90. In France, the CAC 40 Index added 47.34 points, or 1.51%, to 3,190.09.
In Germany, the DAX climbed 14.34 points, or 0.45%, to 3,182.30, after Standard & Poor's, like BusinessWeek Online, a division of The McGraw-Hill Cos., said Germany's AAA debt rating "could be at risk" if the government abandons budget consolidation. However, S&P's baseline is that Germany will step up tackling its structural problems after regional elections next February.
Asian markets finished down. In Japan, the Nikkei 225 index shed 76.86 points, or 0.87%, to close at 8,727.66. In Hong Kong, the benchmark Hang Seng index lost 73.42 points, or 0.74%, to close at 9,784.57.