Stocks struggled for direction Wednesday with the major indexes finishing mixed as terrorism concerns and soft economic data capped the upside momentum from the previous session. U.S. intelligence officials said a terror threat to the U.S. could come as early as the summer.
The Dow Jones industrial average fell 7.73 points, or 0.08%, to 10,109.89. The Nasdaq composite index gained 11.5 points, or 0.59%, to 1,976.15. The broader Standard & Poor's 500-stock index was up 1.9 points, or 0.17%, at 1,114.95.
Among stocks on the move Wednesday, EMC (EMC) led the computer storage group up on news of its expansion of a partnership with Dell (DELL).
Rate-sensitive sectors such as REITs, thrifts, and mortgage bankers rose as the 10-year Treasury note yield fell to 4.67%, near the bottom of its recent range.
Oil stocks fell as crude oil prices were volatile after a mixed set of inventory data. Telecommunications services stocks were hurt by Comcast's (CMCSA) target to offer digital phone services by the end of 2005.
Shares of homebuilders dropped on a report showing sales of new homes in April slipped to a 1.093 million annual pace, below forecasts of 1.15 million, from a 1.228 million pace in the previous month. The 11.8% decline is the biggest drop in 10 years, and is a marked reversal from the upward trend in the housing market throughout the past couple of months, notes Informa Global Markets.
In other economic news, orders for big-ticket items, or durable goods, fell 2.9%, much worse than an expected 1.3% drop, in April. However, the figure for March was revised up to 5.7% from 5% previously. In April, durable goods orders excluding transportation fell 2.1%, and excluding defense were down 2.4%, so declines were widespread, says Informa Global Markets. Among the few categories showing gains were computer and electronic goods (+5.4%), communications (+16.6%), and electrical equipment and appliances (+3.4%). Core capital goods (ex-defense and aircraft) orders fell 3.5%.
Economic data coming Thursday include jobless claims, which are expected to drop back down to 332,000 for the week ending May 22, from 345,000 the week before. This outcome is closer to the 4-week moving average of 333,500, which marked the lowest level since 2000 and is consistent with improving labor market conditions, notes Informa Global Markets.
The first revision to first-quarter gross domestic product is forecast to be 4.3%, up from 4.2% previously. The swelling trade deficit restrains an otherwise strong revision to GDP, says Informa Global Markets. The trade data will pare about 0.2% from the GDP revision. However, housing, inventory and output data together tack on twice that much in growth that was unreported in the advance data, notes Informa.
Companies on the earnings calendar Thursday include Costco Wholesale (COST), Chico's FAS (CHS), Dollar General (DG), Vivendi Universal (V), and more.
Auto-parts retailer AutoZone (AZO) reported third-quarter earnings per share of $1.68, vs. $1.30 (GAAP basis) a year ago, on 2% same-store sales rise and 5.6% total sales rise. The shares were slightly higher.
Software provider Computer Associates (CA) posted fourth-quarter earnings per share of 15 cents, vs. 18 loss per share a year ago (GAAP), on a 9.6% revenue rise. The company sees $865 million to $885 million in first-quarter revenues, and 5 cents to 7 cents EPS. For fiscal 2005, it sees $3.5 billion to $3.7 billion in revenue and 28 cents to 33 cents EPS. The stock was higher despite soft guidance; as well as news that the company offered to pay a $10 million fine to settle a Justice Dept. investigation into its accounting practices.
TiVo (TIVO) reported a first-quarter loss of 11 cents per share, vs. 12-cents loss on 21% net revenue rise. The company expects 265,000-300,000 second-quarter net subscription additions. It sees $25 million to $25.8 million second-quarter revenues. The shares rose on heavy volume.
In other news, Defense Secretary Donald Rumsfeld shelved the proposed $23 billion deal with Boeing (BA) for the Air Force to buy and lease aerial refueling tankers until yearend or later, amid congressional criticism, reports the Wall Street Journal.
Boston Scientific (BSX) shares rose after the company says its drug-eluting stent Taxus is doing better than expected, and exceeding the company's targets. It believes the Taxus stent worth is $2.5 billion this year, $4 billion in 2005, and $4.8 billion in 2006.
Another stent maker, Guidant (GDT), fell after the company announced it has discovered problems with its Champion stainless steel stent. Problems with the stent design could delay its approval filing.
Magal Security Systems (MAGS) was among smaller-cap security-related stocks that rallied on news that U.S. officials have obtained intelligence deemed "highly credible" indicating Al Qaeda and other terrorists are in U.S., preparing to launch an attack this summer.
Wells Fargo (WFC) agreed to acquire Strong Financial Corp. for an undisclosed sum. The purchase includes $27 billion in mutual fund assets and $7 billion in institutional investment accounts.
Treasury prices rose on the terror story -- the U.S. is planning anti-terrorism measures after Al-Qaeda warned of an attack this summer, says Informa Global Markets. Soft durable goods data also helped boost prices. The Treasury's auction of $25 billion in 2-year notes was strong, notes Informa Global Markets.
European stock markets finished higher. London's FTSE 100 index was up 20.3 points, or 0.46%, to 4,438.3, despite news that Britain's first-quarter GDP slowed to growth of 0.3% from 0.6% in the fourth quarter.
Germany's DAX index rose 39.45 points, or 1.03%, to 3,867.52 in reaction to yesterday's strong U.S. rally and overnight surge in Tokyo. Investors ignored a report German June Gfk Consumer confidence fell to 4.5 from a downwardly revised 4.7.
In Paris, the CAC 40 index gained 49.39 points, or 1.37%, to 3,659.92.
Asian markets finished higher. In Japan, the Nikkei index rose 189.16 points, or 1.73%, to 11,152.09. In Hong Kong, the stock market was closed for a holiday.