Updated from 2:33 p.m. EDT
Stocks in the U.S. dipped to session lows late Wednesday while crude oil tapped a new record, as mostly positive earnings and a better-than-expected productivity report failed to pull buyers out of the woodwork.
Dow Jones Industrial Average
was sliding 1.6% as the
each gave up 1.8%.
"I think we're in a fragile recovery," said Phillip Roth, chief technical market analyst with Miller Tabak. "The market's in a struggling advance. And after yesterday's reversal early, which seemed like a pretty powerful reversal, it fizzled at the end of the day, and there's no follow-through."
In Tuesday's session, the major indices all finished higher despite soaring oil prices and a raft of bad news from the financial sector, though trading volume was rather thin.
Georges Yared, chief investment strategist with Yared Investment Research, said investors are probably taking a rest as earnings season winds down. "We're going to have a slow drip on some more earnings, but the big companies have mostly reported at this point," he pointed out.
Bill Stone, chief investment strategist with PNC Wealth Management, agreed. "We were due for a little relaxation," he said, pointing out that the S&P has risen nearly 11%, including dividends, since its March low point. "Most people would call that a year's return. I would expect people to digest it a little bit."
Roth, who maintains that the market's climb for most of 2008 remains a bear-market rally, called the action over the past few months "a crummy, light-volume rally with poor breadth. And it looks like it might be ending. It's also more than 3 months old. It basically began in the third week of January for most stocks."
"We haven't seen the low," Roth continued, "and I think we're going to break below the March lows. It's just a question of when."
Stocks began on soft footing, but slid even further after crude oil hit a new high, $123.80 a barrel, even though the government said crude stockpiles were up by 5.7 million barrels last week. Crude later eased to a $1.69 gain at $123.53. Gold futures were off $4.80 to $871.20 an ounce.
On the plus side Wednesday, the Labor Department said first-quarter nonfarm productivity rose at a 2.2% annual rate, topping the 1.5% consensus estimate and the 1.8% pace in the fourth quarter. Job cuts and reductions in hours worked helped the increase. Growth in productivity is viewed as a sign that inflation is being kept under control.
At the same time, unit labor costs were up 2.2%, a cooler figure than had been forecast and down from a 2.8% advance in the previous quarter.
However, hawkish remarks from a
official were contributing to keeping the major averages in check. Thomas Hoenig, president of the Kansas City Fed, though not a voting member of the Federal Open Market Committee, said during a speech Tuesday that policymakers might have to look at raising interest rates in order to deal with "serious" inflation issues.
The Fed has lowered its fed funds target rate by 325 basis points since last September as part of its effort to stem the credit crises that has been plaguing financial firms, but during that time, energy and food prices have been soaring, leading to worries that inflation rates could rise too far, too fast.
Those comments, combined with the productivity data, were supporting the dollar, which rose across the board. The euro lost 0.8% to $1.5398, and the yen closed off 0.2% at 104.86. The British pound sank 1% to $1.9527.
Elsewhere, traders were taking in stride another report showing a drop in home sales. The National Association of Realtors said that pending home sales in March fell 1%, meeting expectations. February's decline was revised to 2.8%.
Among companies, tech bellwether
last quarter with an adjusted profit of $2.3 billion, or 38 cents a share. Sales ramped up 10.4% to $9.8 billion. Still, shares were recently shedding 1.9%.
Meanwhile, fellow tech names
confirmed they are planning to
The new company, to be named Clearwire, is set to receive a $3.2 billion collective investment from
Time Warner Cable
and Bright House Networks.
Sprint shares erased early gains to lose 1%, though Clearwire was still adding 1.6% after a brief dip into negative territory.
Back on the earnings front, digital television purveyor
said its first-quarter profit swelled by 10% to a better-than-anticipated $371 million, on a top line that surged 17% to $4.6 billion. The stock gained 4.9%.
saw its shares tack on 2.9% after the entertainment conglomerate said earnings leaped 22% to $1.1 billion in the most recent quarter. Per-share income handily beat the Wall Street consensus.
Meanwhile, health-care name
edged past first-quarter projections and issued in-line guidance, but shares were backing off from early gains to slip 2.7%.
beat by a penny, but the Internet-technology consulting firm also offered subpar guidance for the current quarter and for all of 2008, and shares were sliding 10.3%.
As for the day's analyst research, Deutsche Bank and Sandler O'Neill each lifted
rating to buy from hold a day after the Big Board reported a
. On the other hand, Deutsche Bank cut China-based
to hold from buy.
Shares of NYSE was recently up a fraction at $73.19, having pared back from bigger gains earlier in the day, and Sohu.com surrendered 9%.
Treasury prices were picking up amid the decline in equities. The 10-year note rose 15/32 in price to yield 3.86%, and the 30-year bond jumped 23/32 in price, yielding 4.62%.
Markets abroad were mostly higher. Hong Kong's Hang Seng Index lost 2.5% overnight, but Nikkei 225 in Tokyo climbed 0.4%. In Europe, London's FTSE 100, Germany's Xetra Dax and the Paris Cac were all ahead by 0.7% or more.