The economy and earnings seem both to be moving in the right direction. However, market valuations hitting fresh one-year highs are weighing heavily on investors. The Nasdaq reversed sharply after "running into psychological resistance at 2,000," says Mark Arbeter, chief technical analyst for Standard & Poor's.
The Dow Jones industrial average added 19.78 points, or 0.20%, to 9,873.42. The broader Standard & Poor's 500 index fell 1.89 point, or 0.18%, to 1,064.73. The tech-heavy Nasdaq lost 19.82 points, or 1%, to 1,960.25.
On the tech front, investors seem to be expecting a strong mid-quarter update from computer chip giant Intel Corp. (INTC
) as personal computers have been selling well.
On Thursday, Intel is expected to raise its fourth-quarter revenue range when it holds a mid-quarter update after the market close. Analysts see the revenue range rising to between $8.3 billion and $8.7 billion, from $8.1 billion to $8.7 billion previously.
), a maker of programmable microchips, raised its revenue outlook for the current quarter ending in December, citing broad strength.
Dow member Merck (MRK
) rose after it said that earnings should rise between 5% and 9% in 2004 after an expected decline this year. The drugmaker has been struggling to bring new products to market.
Shares in General Motors (GM
) jumped after a Goldman Sachs analyst issued a report saying the company's pension plan is improving and earnings should benefit next year.
Wal-Mart Stores (WMT
), also a Dow component, said it would stop accepting MasterCard for certain debit-card transactions because of high fees.
Shares of for-profit college operator Career Education (CECO
) plunged Wednesday after a press report of allegations from a former former employee of Brooks Institute of Photography about potential accounting fraud. The company said an investigation of the allegations has shown them to be "false, malicious, and possibly libelous".
In economic news, the latest revision on third quarter productivity showed a rise of 9.4% annual rate of growth, up from 8.1% previously. That's the best showing in twenty years. Unit labor costs were revised lower to -5.8% from -4.6%. "The data certainly underscore the sensational gains in productivity that have been the hallmark of this economy and kept prices low," says MMS International, an economic research unit
Non-manufacturing ISM data for November fell to 60.1 in November from 64.7 in October. That's weaker than expected, but nevertheless the data still reflect expansion, says MMS. Employment rose to 54.9 from 52.9. New orders slipped to 60.1 from 59.9. Prices paid edged down to 58.0 from 58.7.
On Thursday, investors will get an update on initial jobless claims. Weekly jobless claims should dip 1,000 to 350,000. That would pull down the four week moving average 1,000 lower to 358,000 or the lowest level the average has been at since February of 2001.
Investors are focused on Friday's November employment report. Most economists see strong payrolls data for the month.
Treasuries finished under water Wednesday afternoon. The market remains under pressure ahead of Friday's payroll report, with fears of a 200,000 increase in jobs. Supply also remains a factor with auctions for 5- and 10-year notes set for next week. The bearish tone is likely to continue as traders look ahead to tomorrow's claims data.
European stock markets finished higher. London's Financial Times-Stock Exchange 100 index added 13.10 points, or 0.30%, to 4,392.00, amid news that the services index rose to 59.6 from 59.1 in October and the Halifax House Price index growth slowed.
In Paris, the CAC 40 added 30.07 points, or 0.87%, to 3,501.93, amid news the French PMI services index fell to 59.6 from 59.9 in October, but the overall European services index rose to 57.5 from 56 in October.
Germany's DAX index gained 66.40 points, or 1.74%, to 3,875.66 as the European services index rose to 57.5 from October's 56.
Asian stock markets finished lower. Japan's Nikkei 225 index dropped 83.76 points, or 0.80%, to 10,326.39, with losses led by Takefuji Corp. the nation's biggest consumer finance firm, whose CEO is involved in a wiretapping scandal. In Hong Kong, the Hang Seng index shed 51.05 points, or 0.41%, to finish at 12,361.18.