Stocks Never Get Started
Updated from 4:06 p.m. EST
Stocks staggered to a mixed close Thursday in a session whose tone was closely tied to action in the oil futures market.
The
Dow Jones Industrial Average
fell 6.72 points, or 0.06%, to 10,626.35. The
S&P 500
rose 2.14 points, or 0.18%, to 1190.21. The
Nasdaq
rose 0.67 point, or 0.03%, to 2016.42, after its fifth loss in six sessions yesterday pushed the tech index to a two-month low. The 10-year Treasury bond, which gained 10/32 in yesterday's stock market rout, added another 10/32 to yield 4.47%. The dollar rose against the yen and euro.
Closing volume on the
New York Stock Exchange
was 1.6 billion shares, with advancers beating decliners by a ratio of 9 to 3. Volume on the Nasdaq was 1.8 billion shares, with advancers virtually matching decliners.
The April crude futures contract fell 20 cents to $56.40 a barrel in Nymex floor trading, having traded higher for most of the session, touching $57.50 at one point. On Wednesday, the contract vaulted $1.41 to $56.46 as bulls seized on Energy Department data showing a 2.9-million-barrel drawdown in gasoline stocks.
"Oil remains the headwind in this market," according to Richard Yamarone, chief economist at Argus Research. "We are seeing oil's influence on economic data. Manufacturing is clearly in a deceleration mode. Anyone who uses oil directly or any of its derivatives are getting hit."
The rise in oil occurred even as OPEC pledged to pump an additional 500,000 barrels a day to depressurize the futures market. On Thursday,
Bloomberg
quoted the oil minister of the United Arab Emirates saying the cartel will "put more oil in the market if prices continue to rise."
Meanwhile, the Philadelphia Federal Reserve's business activity index fell to 11.4 in March, vs. 23.9 in February. Economists were expecting a reading of 20, but the March level was the lowest in 20 months.
"The low Philly Fed number has not made that much of a difference in the market's behavior," said Larry Wachtel, senior market analyst at Wachovia Securities. "There are too many other important factors holding this market down."
In other economic news, initial jobless claims fell by 10,000 to 318,000 in the most recent week. Elsewhere, the Conference Board's index of leading economic indicators, or LEI, rose 0.1% in February -- as expected -- following a revised 0.3% decline in January. January's gain snaps a two-month skid.
The market's weak performance Thursday comes despite largely positive earnings and more merger-and-acquisition activity.
"It doesn't seem as though the M&A activity has helped the market much," according to Robert Pavlik, portfolio manager at Oaktree Asset Management. "The market is on a path of least resistance. That path is downward, and oil is playing a major role. The market needs to find a base right here. Once we reach the oversold level we might be able to find support; the first level of support for the Dow is 10,600, and for the S&P it is 1180. If that doesn't hold, the next stops are
respectively 10,350 and 1163. If the first lines of support don't hold, then I have to really start looking for entry points for certain stocks."
The takeover battle for
Toys R Us
(TOY)
came to an end with a group led by Kohlberg Kravis & Roberts agreeing to buy the chain for $6.6 billion, or $26.75 a share. The stock closed up $1.30 to $26.07.
MCI
(MCIP)
reported that
Qwest
(Q)
plans to up its takeover offer for the long-distance company to $26 a share in cash and stock from $24.60. That's more than $5 above the cash-and-stock acquisition MCI agreed to last month with
Verizon
(VZ) - Get Report
. MCI closed down 45 cents to $23.30, while Qwest finished down 8 cents to $3.74. Verizon closed down 13 cents to $35.21.
Goldman Sachs
(GS) - Get Report
and
Morgan Stanley
(MSD) - Get Report
shares were mixed despite better-than-expected earnings. Goldman reported first-quarter earnings of $1.51 billion, or $2.94 a share, compared with $1.19 billion, or $2.50 a share, a year ago. Morgan Stanley reported net income of $1.47 billion, or $1.35 a share, up from $1.23 billion, or $1.11 a share, a year ago. Goldman closed up 7 cents at $110.04, while Morgan Stanley finished down 88 cents, or 1.52% to $57.07.
Fortune Brands
(FO)
reaffirmed earnings guidance for the first quarter and full year. The company said it was on track to deliver double-digit growth in EPS. The stock closed down 85 cents, or 1% to $83.01.
Ann Taylor
(ANN)
said it swung to a fourth-quarter loss of $12.5 million, or 18 cents a share, from a year-ago profit of $31.8 million, or 43 cents a share. Excluding charges, the company lost 7 cents a share in the quarter, matching estimates. It also affirmed guidance. The stock finished up $1.16 to $26.43.
Viacom
(VIA) - Get Report
confirmed after the bell Wednesday that it is studying a plan to split itself into two separate, publicly traded companies. One would house the conglomerate's
CBS
broadcast television and billboard assets. The other would comprise MTV and other cable properties. Viacom closed up 33 cents, or .89%, to $37.33.
FedEx
(FDX) - Get Report
said that it had earned $317 million, or $1.03 a share, for the third quarter ended Feb. 28. Third-quarter revenue rose 21% to $7.34 billion, compared with the same time a year ago. Analysts were expecting 98 cents, according to Thomson First Call. The stock closed down 9 cents to $96.84.
Retek
(RETK)
gained after
SAP
(SAP) - Get Report
raised its takeover offer from $8.50 to $11 a share. The sweetened bid comes after
Oracle
(ORCL) - Get Report
offered $9 a share. Retek finished up $1.13 to $11.65.
Rigel Pharmaceuticals
(RIGL) - Get Report
announced that data from a recent phase II clinical study of its treatment of allergic rhinitis will be presented at the American Academy of Allergy, Asthma and Immunology conference this Sunday. The stock closed up 2.78%, or 44 cents to $16.29.
Amylin Pharmaceuticals
(AMLN)
won U.S. approval on Wednesday to market its injectable diabetes drug Symlin for use with insulin in patients with two types of diabetes. The stock closed up 6.30%, or $1.23 to $20.76.
Overseas markets closed mixed, with London's FTSE 100 down 0.13% to 4931 and Germany's Xetra DAX up 0.16% to 4315. In Asia, Japan's Nikkei fell 0.8% overnight to 11,776 and Hong Kong's Hang Seng lost 0.1% to 13,818.