Let's see, oil prices drop, CSCO reports good earnings, the trade deficit is lower than anyone expected, and STILL the market is down.......I give up!
Stocks Mixed Despite Dip in Oil Prices
Wednesday May 11, 1:27 pm ET
By Peter Svensson, AP Business Writer
Stocks Are Mixed As Investors Dismiss Narrowing U.S. Trade Deficit, Drop in Oil Prices
NEW YORK (AP) -- Stocks were mixed Wednesday as investors uncertain about the direction of the economy looked past a reassuring earnings report from Cisco Systems Inc., a narrowing U.S. trade deficit and a drop in oil prices.
In early afternoon trading, the Dow Jones industrial average was down 11.89, or 0.1 percent, at 10,269.22.
Broader stock indicators were mixed. The Standard & Poor's 500 index was up 0.36, or 0.03 percent, at 1,166.58, and the Nasdaq composite index fell 4.30, or 0.2 percent, to 1,958.47.
Michael Murphy, managing director at Wachovia Securities in Baltimore, noted that while the day's economic and corporate news was generally good, news of late has been mixed, and buyers are waiting for a clear signal to get into the market.
"People are very hesitant right now to pull the trigger," Murphy said.
Contributing to an early drop in the indices were comments by Federal Reserve Bank of St. Louis President William Poole, a member of the Fed's rate-setting committee. He was quoted by Dow Jones Newswires as saying the Fed's stated intent to raise rates at a measured pace "should not be viewed as an iron clad commitment."
The statement, while nuanced, raised the specter of "stagflation," a situation in which inflation rises even as economic growth starts to slow, and which could still force the Federal Reserve to raise interest rates.
Prices have been under upward pressure this year because of rising energy costs. There was a slight reprieve Wednesday, as light, sweet crude oil for June delivery fell 67 cents to $51.40 a barrel on the New York Mercantile Exchange. Oil has been rising the last six sessions after briefly dipping below the psychologically important $50 level.
The Commerce Department reported that the nation's trade deficit fell sharply in March as U.S. exports climbed to an all-time high, good news for exporting companies. The surge of textile shipments from China slowed.
Late Tuesday, Cisco reported earnings for the latest quarter, excluding special items, of $1.5 billion, or 23 cents per share, beating Wall Street analysts' expectations by a penny a share. The maker of data networking gear also said its third-quarter sales jumped more than 10 percent, and it expects sales to grow this quarter. Cisco was up 17 cents at $18.38.
The deficit narrowed by 9.2 percent to $54.99 billion, down from the record monthly deficit of $60.57 billion set in February.
Tuesday, the Dow fell 103.23, or 0.99 percent, amid rumors that some hedge funds may have been whipsawed last week, when investor Kirk Kerkorian announced an offer for General Motors Corp. stock and Standard & Poor's downgraded the company's bonds to junk status. Massive losses at hedge funds could force them to liquidate holdings, flooding the market.
The stock of GM, a Dow component, Wednesday fell 56 cents to $30.97.
Neil Massa, equity trader at John Hancock Funds in Boston, said fears surrounding the hedge funds were still weighing on the market Wednesday.
"The Cisco earnings we kind of thought would be the catalyst to get the market higher, but it turned out to be a nonevent ... There's a real disconnect now between the fundamentals of that we're getting in the marketplace and the sentiment," Massa said.
Demonstrating the raw nerves of the market, the stock indices spiked lower around noon on news that the White House and Capitol building were evacuated because an aircraft intruded over protected airspace. When the "all clear" was sounded 15 minutes later, the indexes recovered to their previous lows.
Eastman Kodak Co., in the midst of a difficult transition from film-based photography to digital, rose $1.52 to $26.97 after it said Chief Executive Daniel Carp would step down in favor of his second-in-command, Antonio Perez.
Leading Internet music retailers were down heavily after Yahoo Inc. said would launch a subscription-based music store with prices that undercut competitors substantially.
RealNetworks Inc. plunged $1.43 to $5.87, Napster Inc. fell $1.91 to $4.44 and Apple Computer Inc. dropped $1.64 to $34.78.
Declining issues outnumbered advancers 9 to 5 on the New York Stock Exchange, where volume was to 737.1 million shares, compared with 750.8 million at the same point Tuesday.
The Russell 2000 index of smaller companies fell 2.09, or 0.4 percent, to 592.95.
Overseas, Japan's Nikkei stock average fell 0.4 percent. In afternoon trading, Britain's FTSE 100 was down 0.4 percent, Germany's DAX index was down 0.2 percent, and France's CAC-40 was down 0.5 percent. |
