Updated from 1:48 p.m. EDT
Stocks on Wall Street were off their lows but continued to track downward Wednesday afternoon as investors paged through a report from the
for signs of hope for the U.S. economy.
Dow Jones Industrial Average
was off 29 points to 11,488, and the
slipped 6.2 points at 1271. The
was lower by 13 points at 2336.
so-called beige book, which contains anecdotal data on the state of the economy, indicated that many regions have been slow, but the threat of inflation appears to have waned. The Fed also said that although exports had boosted factory output, the lift in activity had since declined. It also said consumer spending remains slow.
"From a Fed watcher point of view it doesn't look like they're going to raise rates anytime soon," said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com. He said that declines in the dollar had stimulated exports, but now that the greenback is strengthening, export growth is cooling even as the U.S. consumer regains some strength.
Several financial-services names held the spotlight. Continuing to stoke speculation on a potential deal to help struggling brokerage
said that Korea Development Bank has inked a proposal to buy a 25% stake in Lehman. The news agency cited a report in a widely circulated South Korean newspaper.
, a commodities investment fund that is 20%-owned by Lehman, announced that it will be shutting down because of bad bets on copper and natural gas.
Elsewhere in the financial sector,
The Wall Street Journal
reported that large Chinese banks are reducing their investments in mortgage debt issued by
Following the report, Fannie successfully issued $2 billion in short-term bills at an interest rate lower than a week ago, offering some reassurance to investors.
Worries for financial firms were not confined to the U.S. The Royal Bank of Scotland said that U.K. bank
may have to raise $13.3 billion in capital to attain liquidity levels on par with competitors.
named Tom McManus, former chief investment strategist at Banc of America Securities, as chief investment officer.
Back in merger news, beverage maker
offered to buy China Huijan Jice for about $2.5 billion.
In earnings, machinery manufacturer
reported fiscal third-quarter earnings that beat analyst estimates and raised its 2008 forecast. Office-supplies retailer
reported that second-quarter earnings dropped 16% year over year.
In the realm of commodities, crude oil declined 36 cents to settle at $109.35. Gold was down $2.30 at $808.20.
Shifting to economic data, employment consultancy Challenger, Gray & Christmas announced that employers announced job cuts totaling 377,325 for the summer, a 30% increase over spring layoff numbers.
The Census Bureau said factory orders for July were up 1.3% in July, vs. a 2.1% increase in June. Analysts had been looking for an increase of 0.4%.
said that its auto sales in the U.S. dropped 26.6% in August on flagging sales of large pickups and SUVs. The company also said it would reduce production for the second half of 2008.
reported a 20% year-over-year drop in August sales but improved sales by 31% from July.
Longer-dated U.S. Treasury securities were slightly higher in price. The 10-year was up 10/32 to yield 3.7%, and the 30-year was adding 22/32, yielding 4.31%. The dollar was gathering strength against the euro and pound, but falling vs. the yen.
Overseas exchanges were mainly trading lower. The FTSE in London, the Dax in Frankfurt and the Hang Seng in Hong Kong were showing weakness, while the Nikkei in Japan was up slightly.