Blue-Chips Fall, but Yahoo! Lifts Nasdaq - TheStreet

Blue-Chips Fall, but Yahoo! Lifts Nasdaq

The Dow bows to pressure from Wal-Mart and Hewlett-Packard. Treasury prices drop.
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Updated from 2:36 p.m. EDT

Stocks in New York went out narrowly mixed Tuesday as investors digested a cautious outlook at

Wal-Mart

(WMT) - Get Report

, the return of surging oil futures, and sobering words on the liquidity crisis from

Federal Reserve

Chairman Ben Bernanke.

The

Dow Jones Industrial Average

, under pressure from both Wal-Mart and the day's worst-performing component,

Hewlett-Packard

(HPQ) - Get Report

, fell 45 points, or 0.4%, to 12,831. The

S&P 500

was down fractionally, losing a half-point to 1403.

The tech-laden

Nasdaq Composite

, however, eked out a 7-point gain, or 0.3%, at 2495, following encouraging news at

Yahoo!

(YHOO)

.

"We're in no-man's land," said Fred Dickson, senior vice president and market strategist with D.A. Davidson. "Little incremental news items have what appear to be fairly significant intraday market impact, but when you look at it over four or five days, they cancel each other out."

Dickson added that that there isn't enough good news to push investors on the buy side much higher, and further drags remain in stubbornly high oil prices and the weak U.S. dollar.

"Overall, investor confidence seems very, very low," he said. "The real good news is that we haven't seen big drops on light volume, and typically that's what we'll see in a really crummy market." He noted that that excludes "occasional" drops like the one that occurred Friday, which was, at any rate, followed by a Monday bounce-back.

Charles Rotblut, senior market analyst with Zacks Investment Research, said, "It seems like people are on hold to see whether we'll actually see the second-half recovery occur. We're entering a period without a lot of catalysts: earnings season is over, and the Fed is on hold at least until August. People are focusing on oil and gas to see how expensive it'll be for people to fill their tank this summer."

Indeed, stocks saw pressure earlier as crude oil jumped to a new intraday high of $126.98 a barrel before easing to $125.80, a gain of $1.57. The nationwide average for gas prices at the pump hit yet another new record of $3.732.

"Obviously every time

oil turns up, then there's a little bit of fear that this is going to squeeze off consumption," said Kenny Landgraf, president and founder of Kenjol Capital Management. "There also are worries about inflation: 'Where is there an end in sight for this?'"

He commented that ongoing concerns about worldwide supply disruptions, together with last week's Goldman Sachs prediction that oil could ratchet up to $200 within two years, have had a substantial impact on people's willingness to push prices ever higher.

"That might be a bubble, but who wants to stand in front of that train?" he said. "There are too many tough geopolitical events going on for you to want to get on the short side of that."

Gold futures, however, sank $15.30 to $869.60 an ounce, and the U.S. dollar firmed against both the euro and the yen. The dollar index, which measures the currency against a basket of its major counterparts, climbed 0.4%.

Also, Treasury prices were sliding, indicating at least a temporary confidence boost in stocks. The 10-year note was off 27/32 in price to yield 3.90%, and the 30-year bond plunged 1-10/32 in price, yielding 4.62%.

That action came even after Bernanke offered sobering comments on the liquidity crisis. Speaking at an Atlanta Fed conference this morning, he said that, despite some "welcome signs" the turmoil is abating, "at this stage conditions in financial markets are still far from normal."

Bernanke cited several justifications for that assessment, including the fact that a number of "moribund" securitization markets remain, that risk spreads are still "quite elevated," and that pressures persist in short-term funding markets.

"Ultimately," he said, "market participants themselves must address the fundamental sources of financial strains -- through deleveraging, raising new capital, and improving risk management --and this process is likely to take some time."

On the corporate front, Wal-Mart's current-quarter outlook leaned to the lower end of expectations, even as its first-quarter profit grew by 6.9% to a better-than-expected $3.02 billion, or 76 cents a share. Shares dropped 2.8%.

Separately, the Commerce Department reported that retail sales, excluding cars, swelled by 0.5% in April, compared with the 0.2% economists' consensus. March data were revised upward to 0.4%. Keeping in the effects of declining auto sales, the numbers showed a drop of 0.2%, as expected.

Meanwhile, Hewlett-Packard confirmed that it will acquire

Electronic Data Systems

(EDS)

. H-P said it will pay $13.9 billion in cash, or $25 a share, nearly a billion higher than the top end of the range cited by news reports yesterday. H-P shares slid 5.5% as EDS -- which surged in the prior session -- climbed another 1.1% even though the stock was downgraded by at least three analysts.

Staying in the tech space, Yahoo! gained ground after

CNBC

reported that billionaire investor Carl Icahn may begin a proxy fight at the Internet-portal operator. According to people who have spoken with Icahn, he has recently accumulated as many as 50 million of the company's shares, the report said.

Yahoo!, which took a beating last week after

Microsoft

(MSFT) - Get Report

withdrew its takeout bid for the company, added 5.2%.

Fellow tech name

Research In Motion

(RIMM)

had its price target raised at both Citigroup and Oppenheimer a day after the company unveiled its new BlackBerry Bold product, a possible rival to

Apple's

(AAPL) - Get Report

iPhone. Still, RIMM shares stepped back 0.8%, in retreat from some of Monday's robust gains.

In other research calls, Oppenheimer cut its second-quarter, fiscal 2008 and fiscal 2009 earnings estimates on

Goldman Sachs

(GS) - Get Report

,

Merrill Lynch

(MER)

,

Lehman Brothers

(LEH)

and

Morgan Stanley

(MS) - Get Report

, in part because of expected revenue reversals that will be required by a new accounting treatment. Shares of the companies lost between 0.9% and 3.6%.

Elsewhere,

Liz Claiborne

(LIZ)

shares moved up 2.2% after the clothing designer said adjusted earnings came to 28 cents a share in the first quarter, flying past the dime-a-share average Street target from Thomson Reuters. Including heavy restructuring costs, the company swung to a continuing-operations loss of 16 cents a share.

Also, after the prior close

Sirius Satellite Radio

(SIRI) - Get Report

reported a top line that came in

a hair below estimates

even as its narrowed loss matched expectations. Also, in the earnings call, CEO Mel Karmazin voiced frustration with the time it has taken the Federal Communications Commission to review its proposed merger with

XM Satellite Radio

(XMSR)

.

Sirius shares were off 1.4%. XM, which reported a

widened loss

Monday, added 0.5% to $12.36.

Returning to economic data, the Commerce Department said business inventories were up 1% sequentially in March, or 6.3% higher year over year. Based on current sales data, it should take 1.27 months -- virtually the same as last year -- to work through that inventory.

Also, the Labor Department said import prices, excluding the volatile effects of oil, were up 1.1% in April -- the same as the prior month. Stripping out agricultural products, export prices ticked up 0.6%, or less than half the growth seen in March.

Foreign markets were mainly higher. In Asia, Tokyo's Nikkei 225 ramped up 1.5% overnight, and Hong Kong's Hang Seng Index leaped 2%. As for Europe, Germany's Xetra Dax rose 0.3% and the Paris Cac tacked on 0.5%. London's FTSE 100 gave up 0.1%.