Updated from 4:15 p.m. EDT
Stocks stayed in a fairly narrow range and closed slightly lower Wednesday, as concerns about third-quarter earnings overshadowed some positive news out of the tobacco sector.
Dow Jones Industrial Average
ended down 21.69 points, or 0.2%, to 9545.65, and the
fell 4.15 points, or 0.2%, to 1883.10. The
lost 3.35 points, or 0.3%, at 1025.97.
"We're basically in a trading range at the moment, and we'll just have to wait and see how it plays out," said James De Porre, a trader and contributor to
, a sister site to
. "The bears are rooting for the market to fail and set up a double top, but until we take out last week's lows, that pattern will not be formed."
Louis Parks, senior managing director at Raymond James, said he was "fairly pleased" with the market action Wednesday, particularly given the big gains on Tuesday. While he does expect some profit-taking as the month and quarter draw to a close, he remains optimistic that the market can continue to move higher by year-end.
Stocks posted strong gains Tuesday after the
reiterated that it would keep rates on hold "for a considerable period." Still, some analysts expressed concern that the Fed didn't acknowledge recent strength in the economy and that it described labor markets as "weakening."
On the Dow, shares of
slid $1.50, or 3.4%, to $42.47 after the company told investors that its 2003 earnings would come in at the low end of its range due to a sluggish pickup in industry demand.
jumped $4.19, or 10%, to $44.65 after receiving positive news from the Illinois Supreme Court. The state's high court ruled that the company could post a lower bond than was initially required while appealing a verdict that found the company guilty of misleading smokers about the safety of "light" cigarettes.
surged 13%, or $4.67, to $38.86 after saying it would cut 40% of its workforce -- about 2,600 jobs -- and take a $340 million restructuring charge in the third quarter. The company also lowered its full-year guidance.
Analyst Bonnie Herzog at Smith Barney raised her rating on R.J. Reynolds to buy from hold and lifted her price target on the company's stock, saying its litigation risks have decreased following Altria's court victory. She also raised her target on Altria to $56 from $50, saying the immediate threat of a bankruptcy has been removed.
Herzog is somewhat late to the party. Since
a March 25 article by
, in which several analysts recommended tobacco stocks, Reynolds is up 14% and Altria has gained 39%.
Among the companies reporting earnings,
beat first-quarter profit estimates, but revenue fell slightly short of Wall Street's forecasts. Looking forward, the package delivery company said earnings could fall short of analysts' estimates for the second quarter and full year. FedEx rose 43 cents, or 0.7%, at $66.51.
second-quarter earnings more than doubled on a 7.5% rise in same-store sales, and the company affirmed its existing second-half guidance. Meanwhile, rival
posted a $124 million second-quarter loss that reflected troubles in its credit card unit and weaker-than-expected sales in July and August.
The New York Times
declined 4% after warning that third-quarter earnings would miss analysts' estimates due to a weak advertising environment.
was flat after saying it expects fiscal first-quarter earnings to be in line with its own estimates. The company also reiterated its full-year profit forecast.
said its second-quarter earnings would be at the high end of its initial estimates. Nonetheless, its shares were down $1.13, or 4%, to $27.16.
CIBC raised its 2003 earnings estimates for
, even though the firm expects stronger competition from
next year. Analysts reiterated their neutral rating on the stock.
Merrill Lynch raised its rating on
to buy from neutral, sending shares up 4% and 5.7%, respectively. First Albany upgraded
Abercrombie & Fitch
, lifting its shares 4%.
On the economic front, housing starts fell to 1.820 million in August, below expectations of a decline to 1.830 million, from a revised 1.872 million the previous month. Building permits, on the other hand, rose to 1.886 million from 1.800 million in July, ahead of economists' forecasts.
Mortgage applications rose 5.8% in the week ended Sept. 12, but refinancings skidded 15.4%, according to the Mortgage Bankers Association of America.
New York Stock Exchange
Chairman Richard Grasso called a board meeting for Sept. 24 to discuss the uproar over his compensation. An emergency board meeting was also called for 4:15 Wednesday.
Meanwhile, three Merrill Lynch officials were charged with fraud over a business deal in 1999 between the brokerage firm and
Treasuries were higher. The 10-year note was up 25/32 at 100 19/32, with the yield at 4.18%. Crude oil prices for future delivery declined. The dollar was weaker against the yen and the euro.
Overseas markets were mixed. London's FTSE 100 was down 0.1% at 4293, while Germany's Xetra DAX fell 0.1% to 3561. In Asia, Japan's Nikkei rose 1% to 10,990, while Hong Kong's Hang Seng added 0.6% to 11,140.
On Tuesday, the Dow closed up 118.53 points, or 1.3%, to 9567.34, and the Nasdaq rose 41.55 points, or 2.3%, to 1887.25. The S&P 500 gained 14.51 points, or 1.4%, to 1029.32.