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Stocks finished mixed on Tuesday, as oil prices fell. The major indexes were weak for a good part of the session amid a plunge in consumer confidence and a drop in new home sales.
The Dow Jones industrial average gained 12.58 points, or 0.12%, to 10,456.21. The broader Standard & Poor's 500 index barely budged, finishing up 0.03 point to 1,215.66. The tech-heavy Nasdaq composite index lost 5.04 points, or 0.24%, to 2,116.42, dragged by weakness in the biotech and semiconductor groups.
The price of November NYMEX crude oil settled down 75 cents at $65.07 a barrel, as delays linked to refinery repairs in Louisiana and Texas allowed a stockpile to build up. Front-month gasoline futures, meanwhile, kept its bid through the session, ending at $2.1650 a gallon, up 3.58 cents, reports Action Economics.
On Wednesday, August durable goods orders are expected to increase 1.0%, while shipments increase 0.5%. "We do not expect much of a hurricane impact this month, as the hurricane hit very late in the monthly reporting cycle," says Action Economics. "But, the hurricane and the Boeing strike will leave a big subtraction for September. The data should be consistent with a soft quarter for both equipment spending and inventories."
Federal Reserve Chairman Alan Greenspan spoke to the National Association of Business Economics conference on Tuesday afternoon, and didn't really provide any insights into new Fed thinking in the wake of the two hurricanes, says Action Economics. "After hawkish words on policy and inflation from Hoenig overnight and Yellen, Fed Chairman Greenspan stuck to the broad topic of 'economic flexibility' before the close, saying little to deter the view that the Fed will continue to snug up policy at least through yearend," says Action Economics.
In economic news Tuesday, the U.S. consumer confidence figure plunged in September to 86.5, well below median estimates, and from August's number of 105.6. The sharp drop is directly linked to the damages from Hurricane Katrina, down to 95.0. The "expectations" component saw the most severe drop down to 71.7, the sharpest decline since the start of the war in Iraq. "We expect the jolt to reverse quickly in October and November," however, says Action Economics, "though it will be interesting to see how much lingering oil price firmness depresses these measures."
New home sales declined by 9.9% in August to 1.24 million units from 1.37 million units in July. This data came in much weaker than economists' median forecast, and showed a decline in all four regions of the United States.
Among stocks on the move, Taser International (TASR
) lost ground after the stun gun maker says an SEC inquiry is now a formal investigation giving SEC subpoena power to obtain documents and testimony from all relevant parties. It believes the probe has been expanded to now include examining individuals outside of the company.
In deal news, health insurance giant WellPoint (WLP
) is in talks to acquire WellChoice (WC
), the parent of Empire Blue Cross Blue Shield, for roughly $6.5 billion, according to a report in the New York Times.
In earnings news, Pepsi Bottling Group (PBG
) reported its results for the third quarter on Tuesday. The company's earnings rose to 82 cents per share, from 73 cents during the same period a year ago, on a 9.5% rise in revenue. The bottler refined its 2005 guidance to between $1.83 and $1.87.
Jabil Circuit (JBL
) also posted fourth-quarter earnings. The company saw net profits of 34 cents, vs. 22 cents during the fourth quarter last year, on a 25% rise in revenue. The company said it expects further revenue growth between 8% and 18% in the first quarter, with 2006 earnings between $1.36 and $1.48 per share. Standard & Poor's reiterated its hold rating on the stock. Piper Jaffray upped its target price.
Standard & Poor's announced on Tuesday that Ameriprise Financial (AMPWI
), a spin off of American Express (AXP
), would join the S&P 500 index. Providian Financial, which is being acquired by Washington Mutual (WM
), will be removed from the list of companies in the index.
Treasury yields fell following the steep drop in consumer confidence for September and the slowdown in new home sales in August. Greenspan did not end up speaking directly about near-term economic policy. The 10-year note yield traded at 4.30%.
European stock markets finished lower Tuesday. London's Financial Times-Stock Exchange 100 index was down 5.80 points, or 0.11%, at 5,447.30.
Germany's DAX index lost 32.28 points, or 0.65%, to 4,965.88. In Paris, the CAC 40 index was down 20.12 points, or 0.44%,to 4,546.80.
Asian markets finished lower on Tuesday. In Japan, the Nikkei 225 index dropped 82.59 points, or 0.62%, to 13,310.04.
Hong Kong's Hang Seng index lost 84.43 points, or 0.55%, to 15,189.88.