Stocks finished mixed Wednesday as investors sifted through the Fed's Beige Book report and the latest round of earnings. Traders were also weighing a breakdown in Mideast peace talks, after officials meeting in Lebanon failed to agree on a plan to end the Israeli-Hezbollah violence.
The Dow Jones industrial average edged down 1.2 points, or 0.01%, to 11,102.51. The broader Standard & Poor's 500 crept lower 0.48 points, or 0.04%, to 1,268.4. The tech-heavy Nasdaq composite slipped 3.44 points, or 0.17%, to 2,070.46.
NYSE breadth was slightly positive, with 19 issues advancing for every 15 declining. Nasdaq breadth was 16-14 negative.
Stocks' sideways movement in recent months may set the stage for a fourth-quarter rally, according to Jeff Kleintop, chief investment strategist at PNC Wealth Management. "We do not expect the current conditions in the U.S. stock market to turn into a bear market," Kleintop says. "Stock prices have returned to a more normal (though less comfortable) pattern of volatility, but this is to be expected given the below-average levels enjoyed in recent years."
Others suggest the markets may be poised for near-term gains. "At this point, the most likely target for a further rally should be the early July recovery highs for the various market indexes," says Richard Dickson, senior market strategist for Lowry's Reports.
Earnings season remained at the forefront Wednesday. General Motors (GM) was higher after the automaker reported a $3.2 billion second-quarter loss, stronger than analyst forecasts.
Fellow Dow member Boeing (BA) was lower after the aerospace company posted its first quarterly loss in three years on charges including costs to settle a Pentagon purchasing scandal.
Outside of the blue-chips, Amazon (AMZN) was sharply lower as the Internet retailer said its second-quarter earnings fell 58% and guided its full-year profits lower.
Shares of Sun Microsystems (SUNW) gained after the software maker swung to a quarterly loss after a profit a year earlier. Excluding restructuring costs, the company broke even, beating analyst estimates.
Thursday holds another busy slate of earnings releases. Companies poised to report quarterly results include Exxon Mobil (XOM), Bristol-Myers Squibb (BMY), DaimlerChrysler (DCX), Northrop Grumman (NOC), and Raytheon (RTN).
M&A activity was also keeping up its recent pace Wednesday. Computer maker Hewlett-Packard (HPQ) agreed to acquire software group Mercury Interactive for $4.5 billion.
On the economic front, the Fed's Beige Book report said the economy continues to grow, though at a modest pace. "The mix in the report is generally what we expected and isn't likely to alter market opinions on the interest rate trajectory," says Action Economics.
The next session holds another set of economic reports. Data releases due Thursday include June new home sales, weekly jobless claims and June durable goods orders.
In the energy markets Wednesday, September West Texas Intermediate crude oil futures closed up 19 cents at $73.94 a barrel after a weekly inventory report showed a much larger than expected decline in gasoline supplies. Crude supplies for the week were unchanged.
European markets finished modestly higher. In London, the Financial Times-Stock Exchange 100 index gained 25.9 points, or 0.44%, to 5,877.1. Germany's DAX index added 17.34 points, or 0.31%, to 5,583.1. In Paris, the CAC 40 index was up 9.88 points, or 0.2%, to 4,943.
Asian markets finished mixed. Japan's Nikkei 225 index declined 121.17 points, or 0.81%, to 14,884.07. In Hong Kong, the Hang Seng index advanced 33.38 points, or 0.2%, to 16,617.24. Korea's Kospi index edged down 0.69 points, or 0.05%, to 1,279.08.
Treasury yields held lower after the Fed's ambiguous Beige Book report. The 10-year note rose in price to 100-22/32 for a yield of 5.03%, while the 30-year bond moved higher to 90-28/32 for a yield of 5.1%.