Stocks End Anemic Session With a Shrug

Stocks take a wait-and-see approach a day before a Fed decision and GDP. The Dow and S&P slump, and the Nasdaq closes nearly flat. Frank Curzio fills you in in The Real Story.
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Updated from 4:10 p.m. EDT

New York's major averages booked another drab finish Tuesday in the face of an ongoing

Federal Reserve

meeting, as well as more uneven earnings reports and dour economic data.

The

Dow Jones Industrial Average

spent most of the day trading in negative territory, at one point shedding nearly 70 points, before ending down 39.81 points, or 0.31%, to 12,831.94. The

S&P 500

lost 5.43 points, or 0.39%, to 1390.94, and the

Nasdaq Composite

tiptoed higher by 1.7 points, or 0.07%, to 2426.1.

Volume was light on both the

New York Stock Exchange

and on the Nasdaq, coming in at roughly 1.88 billion shares and 1.75 billion shares, respectively. Declining issues outpaced winners on both exchanges by a margin of about 3 to 2.

"It's another one of these quiet days," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "The market is waiting on the Fed and the

gross domestic product report, and then it'll be waiting on the employment report. The market is looking for another catalyst to drive us forward."

The Fed, which isn't due to render any decisions until Wednesday, is widely expected to shave 25 basis points off the fed funds target rate. Many observers have also predicted that the move will mark a pause in the central bank's months-long easing cycle. The overnight lending rate, which currently stands at 2.25%, has been brought down by 300 basis points since September.

Preliminary GDP numbers are due out tomorrow, as well, and the Labor Department should report its monthly employment data on Friday.

"It's all about the Fed statement tomorrow," said Chip Hanlon, president of Delta Global Advisors and contributor to

RealMoney.com

, a sister site to

TheStreet.com

. "If the Fed comes out of it and says it thinks it's done enough, and at least indicates it's going to pause its easing campaign, that continues to help the dollar and take the edge off these commodities in the short term."

Hanlon noted that futures today were pricing in a 16% chance that the central bank won't cut rates at all, which he commented would be a long-term positive indicator, even if stocks react negatively in the short run. The probability of a quarter-point easing stood at 84%, leaving no room for a steeper cut.

As for earnings, the newly public

Visa

(V) - Get Report

said first-quarter income jumped 27.6% on a spike in revenue, which on an adjusted basis topped the average Wall Street estimate. The stock was also stamped with positive initial ratings from SunTrust and Wachovia. After an early stumble, shares recovered to close up 6.9%.

Rival

MasterCard

(MA) - Get Report

jumped 13% after demolishing analyst targets with an adjusted first-quarter profit of $3.01 a share.

Meanwhile,

Merck

(MRK) - Get Report

helped pull down the Dow after the Food and Drug Administration rejected its new drug, MK-0524A, which was proposed to raise levels of "good" cholesterol in the body. Shares slid 10.4%, making the stock today's worst-performing Dow component.

On the economic docket, the Conference Board reported that its April consumer-confidence index sank to 62.3, a bit better than expected, from the prior month's revised reading of 65.9. The index's expectations figure, which points to how respondents feel the economy will perform over the next several months, ticked up to 50.1 from last month's 49.4.

"The headline is horrible, but at least the key expectations index did not repeat its March plunge," said Ian Shepherdson, chief U.S. economist with High Frequency Economics. "This is still disastrously weak, though, consistent with real consumers' spending falling at a year-over-year pace of about minus 2%. There is nothing remotely good in here."

Shepherdson added that there is "every chance" of further declines over the next few months, but conceded that the federal government's tax rebate checks, which began shipping out yesterday, might offer "temporary" relief.

Pavlik agreed regarding the effects of the economic stimulus package. "Sentiment might improve literally when the checks start arriving and

people feel a little more positive, having a few more extra dollars in their pocket," he said.

Elsewhere, the February S&P/Case-Shiller survey revealed that its 10-city composite -- a compiling of housing data from 10 major U.S. cities -- showed a "record" year-over-year slide of 13.6% in prices of existing single-family homes. The 20-city composite sank 12.7%, worse than the negative 12% consensus, as 17 of those cities registered all-time lows for declines from last year.

RealtyTrac added more sour data to the pile, saying that first-quarter foreclosures rocketed 112% from last year to 649,917, or one in every 194 U.S. households. The number also represents a 23% jump from the prior quarter.

Back on the corporate front,

Countrywide

(CFC)

saw choppy trading after losing $893 million, or $1.60 a share, in the first quarter, as its credit-loss provision rose to $1.52 billion and charge-offs more than doubled from the prior quarter.

Bank of America

(BAC) - Get Report

agreed to take out the company in January. Countrywide shares ended up 2 cents at $5.85, and BofA stock dipped 0.8% to $37.86.

Germany's

Deutsche Bank

(DB) - Get Report

reported that $4.2 billion in first-quarter writedowns have led to its first quarterly loss in five years, and shares slipped 1.1%. Also, German insurance giant

Allianz

(AZ)

sank 1.6% after saying it will probably be forced to write down $1.4 billion in bad assets, which will contribute to pulling its profit down 66% from a year earlier and make its medium-term goals "harder" to achieve.

Oil companies were flush with positive news, however, as the recent crude-futures climb fattened first-quarter results.

Royal Dutch Shell

(RDS.A)

said its first-quarter profit ballooned 25% to $9.08 billion, and

BP

(BP) - Get Report

reported a 63% surge in earnings to $7.6 billion. Shares of each ended up around 4.5%.

Similarly, agricultural-products firm

Archer Daniels Midland

(ADM) - Get Report

said rising commodities prices pushed its bottom line up 42% in the fiscal third quarter. But shares of ADM, the nation's biggest ethanol producer, shed 3.9% on concerns that the government will pull back on some of its hefty support for the industry as a whole.

At the same time crude, oil plunged $3.12 at $115.63 a barrel, though gas at the pump hit yet another record high of $3.607 a gallon, according to AAA. Gold futures slid $18.70 to $876.80, and the U.S. dollar firmed against the euro to $1.5561 while losing ground to the yen.

In notable analyst calls,

Wachovia

(WB) - Get Report

was upgraded to buy from hold at Deutsche Bank and shares gained 2.5%. Conversely, RBC Capital Markets removed fertilizer maker

Potash

(POT)

from its top picks list, even as the firm kept an outperform rating on the stock. Potash shares slid 6.2%.

Treasury prices were rising. The 10-year note ticked up 7/32 in price to yield 3.80%, and the 30-year bond rose 14/32 in price, yielding 4.53%.

Overseas markets were mixed. In Asia, Tokyo's Nikkei 225 rose 0.2% overnight to 13,894, and Hong Kong's Hang Seng Index climbed 1%. Among European exchanges, the FTSE 100 in London was down marginally, and Germany's Xetra Dax gave up 0.6%. The Paris Cac was off 0.7%.