Stocks Close With Minor Losses - TheStreet

Stocks Close With Minor Losses

Earnings season hits its final lap, and investors refocus on the economy.
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Updated from 4:13 p.m. EDT

Stocks ended slightly lower Wednesday as the

Federal Reserve's

Beige Book report, which said economic activity increased a "notch" in June, failed to inspire any buying interest.

The

Dow Jones Industrial Average

closed down 4.4 points at 9200, while the

Nasdaq

ended lower by 9.4 points at 1721.95. The

S&P 500

finished behind 1.6 points at 987.65.

Volume was light, with 1.36 billion shares moving on the

New York Stock Exchange

and 1.5 billion shares in play on the Nasdaq.

After being caught off-balance by weak consumer confidence data Tuesday, investors were focused on the Beige Book, a survey of economic conditions around the U.S. that evaluates economic activity in the 12 Fed districts for June. Eight of the 12 districts reported stronger economic growth in June, the Fed said, adding that manufacturing activity edged higher in most of the districts.

"The tone of the report improved, but the economy is not racing to the upside," said Tony Crescenzi, a bond market strategist at Miller Tabak and contributor to

RealMoney.com.

Treasuries finished higher, as investors took advantage of the highest yields in almost a year. The 10-year note rose 31/32, with its yield falling 13 basis points to 4.31%.

"Wednesday's bond market rally reflects oversold conditions," said Crescenzi. "Some players are stepping in, believing that even if yields continue to rise, they won't go much higher."

Stocks have traded sideways over the past five sessions. "We have been stuck between 970 and 100 on the S&P 500," said Tim Heekin, a trader at Thomas Weisel. "I think the data we get on Thursday and Friday -- GDP, the jobs report, and manufacturing numbers ... will help break us out of that trading range."

But Heekin thinks the next move could be down. "Earnings guidance has been iffy," he said. "I do not think we have evidence that there is going to be a strong recovery in the second half."

Nevertheless, investors have continued to transfer money into the equity market. "We are getting a steady cash flow into mutual funds," said David Briggs, head of trading at Federated Investors. "It is not a torrent of money. But we are in a phase of accumulation."

More than two-thirds of S&P 500 companies reported second-quarter results. So far, earnings have risen 8.1% on average, according to Thomson First Call. In terms of analyst estimates, this is shaping up to be the best season since the first quarter of 2000, with almost 70% of results beating forecasts.

Among companies reporting on Wednesday,

Duke Energy

(DUK) - Get Report

said second-quarter earnings fell, as a result of mild spring weather and sluggishness in the economy. The company earned $424 million, or 46 cents a share, compared to $474 million, or 57 cents, a year earlier. Shares fell 89 cents, or 4.9%, to $17.33.

Health insurer

Aetna

(AET)

said second-quarter earnings were up to $138.4 million, or 87 cents a share, compared to $108.2 million, or 70 cents a share, a year earlier, as medical costs moderated. Sales fell from a year ago, however. The stock lost $1.49, or 2%, to $67.

Drugstore chain

CVS

(CVS) - Get Report

said earnings were up in the second quarter, as it benefited from a late Easter holiday this year. CVS earned $199.8 million, or 49 cents a share, compared to $176.4 million, or 43 cents a share, in the year-ago period. Shares rose $1.19, or 4.3%, to $28.94.

Janus Capital

(JNS)

reported lower second-quarter earnings, as revenue and assets under management fell from year-ago levels. The mutual fund manager earned $47.5 million, or 21 cents a share, compared to $73.7 million, or 33 cents a share, a year ago. The stock ended off 6 cents, or 0.3%, to $16.87.

Goodyear Tire

(GT) - Get Report

reported a loss for the second quarter, blaming an increase in raw-material costs. The tire company said it lost $73.6 million, or 42 cents a share, compared to a profit of $28.9 million, or 18 cents a share, a year ago. But the loss was less than expected and shares gained 40 cents, or 7.7%, to $5.57.

Generic drugmaker

Andrx

(ADRX)

soared $2.94, or 14.6%, to $23.11 after it reported its second quarterly profit in a row on higher sales. The company earned $14.5 million, or 20 cents a share, compared to a loss of $29.8 million, or 42 cents a share a year ago.

Cox Communications

(COX)

recorded a profit in its second quarter, as analysts were expecting the company to break even. The cable company earned $117.7 million, or 19 cents a share, reversing a loss of $516.2 million, or 86 cents a share, in the year-ago period. Shares decreased 27 cents, or 0.8%, to $32.40.

ConocoPhillips

(COP) - Get Report

said second-quarter earnings were up, as a result of the merger of the former Conoco and Phillips Petroleum. The oil company earned $1.14 billion, or $1.66 a share, compared to $351 million, or 91 cents a share, a year ago. Shares were higher 16 cents, or 0.3%, to $52.11.

In corporate news, the

Securities and Exchange Commission

asked America Online,

AOL Time Warner's

(AOL)

Internet unit, to turn over documents relating to its bulk-subscription program,

The Wall Street Journal

reported. The bulk packages are at the center of an emerging controversy over the quality of AOL's reported subscriber growth in 2000 and 2001. AOL fell 74 cents, or 4.7%, at $15.15.

Metro-Goldwyn-Mayer

(MGM) - Get Report

said Tuesday evening it is withdrawing its $11.5 billion all-cash offer for Vivendi Universal Entertainment, the U.S. media and entertainment subsidiary of Paris-based

Vivendi Universal

(V) - Get Report

. Las Vegas billionaire Kirk Kerkorian, who owns two-thirds of MGM's stock, announced a tender offer for 19% of the company's shares that he doesn't already own. Vivendi American depositary receipts ended down 73 cents, or 4%, at $17.78.

Elsewhere, Thomas Patrick,

Merrill Lynch's

(MER)

executive vice chairman, is retiring at the age of 60. No replacement was named for Patrick, who had worked for the firm for 25 years and engineered its recent cost-cutting campaign.

Internet-search engine

LookSmart

(LOOK)

closed up 54 cents, or 14%, to $4.42 after the company significantly raised its revenue forecast for the year.

Shares of

barnesandnoble.com

(BNBN)

closed up 32 cents, or 15.7%, at $2.36 after

Barnes & Noble

(BKS) - Get Report

agreed to acquire

Bertelsmann's

interest in the online bookstore for $164 million in a combination of cash and notes, or $2.80 a share.

In research action, J.P. Morgan raised its rating on

Dow Jones

(DJ)

to neutral from underweight. The stock ended up 95 cents, or 2.3%, to $43.03.

Crude oil prices for future delivery rose. The dollar was stronger against the euro but weaker vs. the Japanese yen.

Overseas markets were up Wednesday, with London's FTSE 100 closing ahead 0.1% to 4141 and Germany's Xetra DAX finishing ahead 0.03% higher to 3429. In Asia, Japan's Nikkei closed 2.1% lower at 9632, while Hong Kong's Hang Seng lost 0.8% to 10,121.

On Tuesday, the Dow Jones Industrial Average finished down 62 points at 9204.5, while the Nasdaq ended down 4 points at 1731.4. The S&P 500 closed down 7.2 points at 989.