Stocks ended with modest losses Wednesday as investors fretted over some corporate profit warnings and hints from Federal Reserve Chairman Alan Greenspan that the central bank may raise rates at its next meeting.
The Dow Jones industrial average finished down 29.43 points, or 0.28%, to 10,313.36. The broader Standard & Poor's 500 index was off 5.03 points, or 0.45%, to 1,116.27. The Nasdaq composite index lost 7.92 points, or 0.43%, to 1,850.64.
Looking ahead, investors on Thursday will turn their attention to a new batch of corporate results. Among the companies posting results on Thursday will be chipmaker National Semiconductor (NSM) and battery maker EnerSys (ENS).
Several economic reports are due out on Thursday as well. Wholesale inventories in July are expected to register a 0.5% increase vs a 1.1% increase in June. Meantime, first-time jobless claims are seen falling to 343,000 for the week ending Aug. 28 vs. a 362,000 jump in the previous week.
On Wednesday, traders paid close attention to Greenspan, who offered reassuring words about the U.S. economy, suggesting the Fed would continue on its course of tightening monetary policy. Speaking before the House Budget panel, the Fed chief noted the U.S. economy is regaining traction, pointing to the pick-up in August payrolls while business capital spending remains on a solid uptrend, according to Informa Global Markets.
He noted again that the recent soft patch is mostly due to energy prices while inflation has eased some despite high oil prices. There is "nothing here to suggest that the Fed will not follow its plan to raise rates gradually to a more neutral level," Informa says.
The Fed's rate-setting committee is scheduled to meet in less than two weeks when it is widely expected to increase borrowing costs by another quarter percentage point. According to Informa, U.S. debt markets are almost fully priced for a 25 basis point hike at the Sept. 21 meeting, and a follow-up rate increase to bring the Fed funds target to 2% by the end of the year.
Among some of the equities news weighing on the market, database software company Oracle (ORCL) saw its investment rating lowered to market perform from outperform by Piper Jaffray.
Avon Products (AVP), the world's biggest direct seller of cosmetics, warned its third-quarter profit from its U.S. business could decline as much as 10%.
Meantime, Coca-Cola Enterprises (CCE), the world's largest bottler of Coca-Cola drinks, cut its profit guidance for the year, blaming lower-than-expected volume in North America and Europe.
Low-fare carrier JetBlue (JBLU) warned its profits would be hurt by recent hurricanes in Florida.
Delta Air Lines (DAL) said the third largest U.S. airline will cut as many as 7,000 jobs over the next 1-1/2 years and drop Dallas/Fort Worth as a hub in efforts to avoid bankruptcy.
Carnival (CCL), a large cruise operator, warned that Hurricane Frances will reduce fourth-quarter profits.
And Salton (SFP), which makes Westinghouse, George Foreman, and Toastmaster household appliances, posted a wider quarterly losses as restructuring charges more than offset higher revenue.
Meantime, crude-oil prices fell in Nymex trading Wednesday, finishing down 54 cents to $42.77 per barrel. Trading was volatile as investors weighed fears new hurricane threats could further destabilize crude production facilities around Venezuela and the southern Caribbean against news that Iraq resumed oil exports to Turkey and continued assurances from OPEC on the need to act to stabilize prices.
In other stocks news, casino operator Station Casinos (STN) said third-quarter earnings would top its prior guidance, thanks to stronger business at casinos open at least a year and an improving Las Vegas economy.
RadioShack (RSH), the third largest U.S consumer electronics chain, told Wall Street it sees profits growing as much as 21% in 2005 as it improves customer service and launches new growth initiatives.
Korn/Ferry International (KFY), the world's largest headhunting firm, posted a quarterly profit, vs. a year-earlier loss.
Mylan Laboratories (MYL) was in the news after financier Carl Icahn said he had bought a 6.8% in the generic drug maker and opposed the company's proposed purchase of King Pharmaceuticals (KG).
Fast food giant McDonald's (MCD) posted higher sales in August, marking the 16th straight month of improving sales performance.
U.S. Treasuries finished higher in price, with yields moving lower, following Greenspan's testimony to Congress and the dip in the price of equities.
European stock markets finished lower on Wednesday. The Financial Times-Stock Exchange 100 index in London was off 7.20 points, or 0.16%, to 4,558.40. The Bank of England is expected to leave rates unchanged at tomorrow's policy meeting. Amvescap was lower as Invesco Funds Group and AIM Investments, both owned by Amvescap, will pay a $450 million fine to settle allegations they allowed market timing fund trading. Dixons advanced on higher same-store sales.
Germany's DAX index lost 4.88 points, or 0.13%, to 3,884.16. Commerzbank was higher after Citigroup raised its recommendation of the bank's shares. SAP, the world's largest maker of business-management software, was also higher. Schering, the world's biggest maker of birth-control pills, was higher.
In Paris, the CAC 40 index was down 4.59 points, or 0.12%, to 3,677.55. Accor declined after reporting lower than expected earnings. Havas was higher after news that the company was considering a bid for U.S. advertising group Grey Global. But Vincent Bollore, a major Havas shareholder, is reported to be against a possible offer.
Asian markets finished lower on Wednesday. Japan's Nikkei 225 index eased 19.75 points, or 0.17%, to close at 11,279.19, with UFJ Holdings sinking 1.1% ahead of submitting a new restructuring proposal to regulators on Friday. Japan will also announce revised GDP data for the April-June quarter on Thursday. Semiconductor names slid after Lehman cut its sector weighting, with Tokyo Electron down 1.59% while Advantest lost 1.74%. But Softbank rose 0.41% on news that it would be included in the Nikkei average's 225 components.
In Hong Kong, the Hang Seng index lost 86.08 points, or 0.66%, to close at 13,049.96 with properties cooling off after rising in recent sessions on news that the government will auction another prime plot of land in October.