The Dow Jones industrial average finished down 0.85 point, at 10,379.58. The broader Standard & Poor's 500-stock index gained 1.59 points, or 0.14%, to finish at 1,133.60. The tech-heavy Nasdaq composite index moved up 2.64 points, or 0.13%, to 1,998.24. Oil stocks were higher on a rise in crude prices following attacks on Iraqi pipelines, and upgrades of several oil and gas players by Deutsche Bank. Gold stocks were lower as the U.S. dollar made gains. Semiconductor and software stocks were lower.
Traders were timid to advance beyond Tuesday's gains, despite good economic news, and strong corporate earnings, which are often already priced in. A.C. Moore, chief investment strategist at Dunvegan Associates in Santa Barbara, suggests that trading is restrained by the potential disruption of oil supplies in Iraq and Saudi Arabia "from the continuing, and increasing pace of terrorist activities."
MarketScope notes that the tug of war continues between the bulls (betting on strong economic data) and the bears (sweating about an expected rate rise, decelerating earnings growth, and turmoil in Iraq).
In economic news Wednesday, a new report showed continued strength in the housing sector, giving housing stocks a boost. Housing starts for May declined 0.7% to a 1.967 million annual pace, vs. a revised 1.981 million pace in April. Building permits were an impressive 2.077 million, vs. 2.006 million in April, as the labor market improves and potential buyers try to lock into projects before rates begin rising again. Permits rose for both single- and multi-unit properties.
Data on industrial production and capacity utilization for May rose 1.1% vs. April, in line with expectations. Industrial production is now up 6.3% year-over-year, and underscores the healthy prospects for jobs in the manufacturing sector, clearly reflecting an upward bias economic outlook, reports economic research firm, Informa Global Markets. Overall capacity utilization recorded a rise to 77.8% in May from the 77.1% reading in April.
In corporate news, database software company Oracle (ORCL
) posted a fourth quarter earnings per share of 19 cents, vs. 16 cents one year earlier, on an 8.6% total revenue rise. The company reportedly sees a first quarter earnings per share of 9 cents. S&P reiterated its accumulate rating, while JMP Securities trimmed its price target, but maintained a strong buy rating. The stock ended 3.1% lower.
Brokerage Bear Stearns (BSC
) reported second quarter earnings per share of $2.49, vs. $2.05, on a 24% rise in net income to $347.8 million, and an 18% rise in net revenue. In relation to the ongoing SEC investigation into the company's mutual fund trading practices, Bear Stearns says that the SEC is considering bringing a civil injunctive against company. Shares finished higher.
Retailer Best Buy (BBY
) moved 2% lower, despite reporting first quarter earnings of 34 cents per share, vs. 21 cents, on a total revenue rise of 17%, and 8.3% higher same-store sales. Best Buy expects second quarter earnings per share from continuing operations to come in as high as 52 cents, on a 5% to 7% rise in same-store sales.
Delta Air Lines' (DAL
) CEO reportedly said that the company cannot survive as fare levels continue to erode despite an improving economy. Shares dipped 4% lower.
In pharmaceuticals, Neurogen (NRGN
) says that preliminary results from its phase IIa trial using NGD 2000-1 (for rheumatoid arthritis) didn't meet its primary endpoint. The company believes that it's unlikely the drug will be developed for the adult rheumatoid arthritis population. Pacific Growth downgraded the shares to underweight from equal-weight. Shares sank 19%.
Meantime, Santarus (SNTS
) rose 26% on news that the U.S. FDA approved its new drug application for Rapinex Powder for heartburn, symptoms related to gastroesophageal reflux disease, and other ailments.
Economic news this week includes the Bureau of Labor Statistics'
producer price index (PPI) -- which was delayed from last week -- on Thursday at 8:30 a.m. ET.
In earnings news this week, results are expected from software outfit Adobe (ADBE
) on Thursday.
Treasuries finished lower in price Wednesday, after a day of choppy trading. Strong industrial production and capacity utilization numbers pushed yields higher throughout the morning.
The release of the Fed's
Beige book -- a report on economic conditions -- was pretty neutral for Treasuries. "The data do not suggest anything to stray from the 'measured pace' regarding rate increases," reports Informa, but it did point to continued economic strength.
In currencies, the dollar made small gains. The euro was at $1.200, and the British pound, at $1.827. The dollar was at 110.113 Japanese yen. Given the prospects for higher interest rates in the U.S., the dollar stands to gain further ground, says Informa.
European stock markets made gains on Wednesday. London's Financial Times-Stock Exchange 100 index ended up 32.5 points, or 0.73%, at 4,491.10 on news that the jobless rate in the U.K. was unchanged at 2.8%, while unemployment fell by 12,000.
In Paris, the CAC 40 added 31.07 points, or 0.84%, to 3,714.5. Germany's DAX index gained 15.94 points, or 0.40%, to 4,003.24, on news that the Consumer Price Index, a measure of inflation at the consumer level, in the Eurozone rose 0.3% in May, and 2.3% in the first quarter.
Asian stock markets advanced, as fears of an aggressive rate hike strategy in the U.S. eased. Japan's Nikkei 225 index added 254.02 points, or 2.23%, to 11,641.72, with banking names making gains. Mitsubishi Tokyo Financial Group advanced after Goldman Sachs upgraded the stock to in-line from underperform.
In Hong Kong, the Hang Seng index moved 111.09 points higher, or 0.92%, to finish at 12,161.78.