Stocks finished mostly higher Wednesday, as oil prices fell near $60 and Treasury yields snapped out of their inversion for the first time since January. A mixup at tech bellwether Google (GOOG
, weakness in overseas markets and caution ahead of the Bank of Japan's upcoming policy statement kept a lid on gains.
An oversold bounce in the final hour and a half lifted the market from deep early lows, bolstered by defensive groups like food staples and beverages, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 25.05 points, or 0.23%, to 11,005.74. The broader Standard & Poor's 500 index added 2.57 points, or 0.2%, to 1,278.45, ending a four-day losing streak. The tech-heavy Nasdaq composite index edged lower by 0.92 points, or 0.04%, to 2,267.46.
The Fed may end its tightening campaign this spring with rates at 5%, some analysts say. "The deterioration in housing affordability is one key reason," says Jan Hatzius, chief economist with Goldman Sachs. St. Louis Fed President Poole reportedly said Wednesday the housing market may already be cooling.
Of companies in focus, Google (GOOG
) fell after the Internet search giant accidentally released a financial forecast. The guidance included worries about increasing competition and predicted Google's revenue will rise 55% to $9.5 billion in 2006, roughly in line with expectations. Goldman Sachs trimmed its price target on Google to $490.
The largest publicly traded oil company, Exxon Mobil (XOM
), said it plans to increase spending by nearly $2 billion between 2007 and 2010. Shares were modestly lower.
On the positive side, the newly public New York Stock Exchange (NYX
) rose in its first day of trading. The former non-profit recently merged with electronic exchange Archipelago Holdings.
On the earnings front, Pixar (PIXR
) late Tuesday reported lower fourth-quarter profits that still beat expectations. The animation studio is in the midst of being acquired by Disney (DIS
In M&A activity, Dutch media company VNU agreed to be bought by a consortium of private equity firms for $8.9 billion.
Among broker calls, Citigroup (C
) boosted retailer Urban Outfitters (URBN
) from hold to buy and Talbot's (TLB
) from sell to hold.
The economic calendar was light Wednesday, but financial markets faced uncertainty ahead of the Bank of Japan's policy statement Thursday, says S&P MarketScope. Separately, a U.S. payroll derivative auction suggested Friday's nonfarm jobs report will show a 208,000 increase, modestly higher than expected, says Action Economics.
On the economic docket Thursday, January trade deficit is expected to widen to $67.5 billion, says Action Economics. Initial jobless claims are forecast to rise 1,000 to 295,000 for the week ended Mar. 4.
In the energy markets Wednesday, April West Texas Intermediate crude oil futures closed down $1.56 at $60.02 a barrel, as the weekly inventory report showed a bigger-than-expected rise of 6.8 million barrels. Meanwhile, OPEC said it plans to maintain current production levels and Iran stepped up its anti-U.S. rhetoric.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index fell 38.6 points, or 0.66%, to 5,818.8. Germany's DAX index stumbled 65.92 points, or 1.15%, to 5,673.36. In Paris, the CAC 40 index dropped 22.7 points, or 0.45%, to 4,969.51.
Asian markets finished lower. Japan's Nikkei 225 index fell 98.53 points, or 0.63%, to 15,627.49. In Hong Kong, the Hang Seng index dipped 109.27 points, or 0.7%, to 15,493.09. Korea's Kospi index lost 2.62 points, or 0.2%, to 1,314.05.
Prices for 10-year Treasury notes closed slightly lower at 98-05/32 with a yield of 4.73%, while 30-year bonds fell to 96-14/32 for a yield of 4.72%. The short end outperformed, pushing the yield curve been two-year and 10-year Treasuries out of their recent inversion for the first time. Trading was range-bound ahead of the Bank of Japan's policy statement, says S&P MarketScope.