Stocks Trading Near the Flat Line - TheStreet

Stocks Trading Near the Flat Line

Investors are distesting encouraging June retail sales figures, M&A news in the chemicals space and a slight decline in oil.
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Updated from 10:01 a.m. EDT

Stocks in New York were trading near the flat line Thursday as investors digested a merger between

Dow Chemical

(DOW) - Get Report

and

Rohm & Haas

(ROH)

, mixed employment data and concerns about the health of the financial sector.

The

Dow Jones Industrial Average

was recently up 25 points at 11,173, and the

S&P 500

was up a point to 1246. The

Nasdaq

added 17 points to 2251.

Wednesday was tough for the market, as the Dow, the S&P 500 and the Nasdaq each posted losses of more than 2%. Concerns about the viability of ailing government-sponsored mortgage backers

Fannie Mae

(FNM)

and

Freddie Mac

(FRE)

, as well as a rise in crude oil prices, contributed to the selloff.

The Wall Street Journal

reported that the Bush administration has discussed potential plans for Fannie and Freddie. Shares of both companies have fallen sharply of late on concerns about their capital levels. Meanwhile, former St. Louis Federal Reserve President Bill Poole told

Bloomberg

that Fannie and Freddie are "insolvent." Shares of Fannie and Freddie were down 13% and 26%, respectively.

Elsewhere in the financial sector,

Wachovia

(WB) - Get Report

announced Wednesday following the market close that Treasury Undersecretary Robert Steel would be taking over as CEO but also warned that it will lose between $2.6 billion and $2.8 billion in the second quarter before goodwill charges. Shares were tumbling 7.8%

In a bright spot for the financials,

Bank of America

(BAC) - Get Report

CEO Kenneth Lewis announced today that the company would not have to cut its dividend or raise capital.

Testifying before a Congressional panel,

Federal Reserve

Chairman Ben Bernanke said that the credit crisis remains a problem and called for additional power for the Fed to oversee the financial world. Speaking at the same event, Treasury Secretary Henry Paulson said that Fannie and Freddie are important parts of the U.S. housing market and should remain so. He also said that financial institutions should not expect the government to bail them out.

One of the top stories of the morning was a merger deal that will see Dow Chemical buy Rohm & Haas for $78 a share, or more than $15 billion.

Meanwhile, industrial conglomerate

General Electric

(GE) - Get Report

announced it will spin off its Consumer & Industrial business, which makes lighting and electrical switches, among other things, to existing shareholders.

Dow component

General Motors

(GM) - Get Report

led the index lower, falling 5.5% following an announcement that

Toyota

(TM) - Get Report

would begin building its Prius hybrid in the U.S. to meet stateside demand for more fuel-efficient vehicles.

In the retail space, the nation's chain stores were reporting their monthly results.

Wal-Mart

(WMT) - Get Report

said same-store sales climbed 5.8% in June, excluding fuel sales. The world's biggest retailer also lilfted its second-quarter profit outlook.

Costco

(COST) - Get Report

said same-store sales rose 9% in June, beating analyst expectations.

Elsewhere, the

Journal

also reported that

Merck

(MRK) - Get Report

,

Eli Lilly

(LLY) - Get Report

and

Pfizer

(PFE) - Get Report

plan to collaborate to cut costs related to getting new drugs approved.

On the commodities side, crude oil was up 79 cents at $136.84, as Iran conducted further missile tests, sparking investor's supply concerns. Gold was gaining $11.60 at $940.20.

As to economic data, RealtyTrac reported that June foreclosure filings in the U.S. rose 53% year over year to 252,363 homes, indicating that America's housing situation remains grim.

The U.S. Department of Labor said jobless claims for the week ended July 5 declined by 58,000 to 346,000, a lower figure than analysts' prediction of 395,000. A Labor Department analyst advised, however, that the drop was due to difficulties adjusting the data for seasonal shutdowns at auto plants. Accounting for such discrepancies, jobless claims actually increased by 30,000.

Treasuries were gaining in price. The 10-year note was up 5/32, yielding 3.79%, and the 30-year was climbing 4/32 to yield 4.41%. The dollar was slipping against the euro, but higher against the yen and pound.

Abroad, European exchanges were generally weak, while Asian markets gained slightly. London's FTSE, Frankfurt's DAX and the Paris Cac were all trading lower, while Japan's Nikkei and Hong Kong's Hang Seng were ticking upward.