Updated from 4:04 p.m. ESTStocks closed mostly lower Wednesday in a day of volatile trading, despite positive economic and earnings news, as investors failed to find enough evidence that a 6% correction in the Dow Jones Industrial Average had run its course. The Dow lost 15.41 points, or 0.15%, to finish at 10,048.23; the Nasdaq gained 7.68 points, or 0.4%, to 1909.48; and the S&P 500 shed 2.63 points, or 0.24%, to 1091.32. The Nasdaq snapped a four-day skid, but the Dow and S&P extended their losing streaks to five sessions, while hitting new 2004 lows. Volume on the New York Stock Exchange approached 1.5 billion shares, and decliners outnumbered advancers by about 2 to 1. Over 1.8 billion shares changed hands on the Nasdaq, where decliners outpaced advancers by about 5 to 4. The major indices had spent much of the afternoon in the black, after a brief selloff. Just before noon EST, blue-chips moved about 40 points lower on a report that an unexploded bomb was found on a French train line. They regained ground, though, on news the failed sabotage was probably not the work of al Qaeda. The hiccup was the latest in a series of terror-related plunges that have assailed the market in the last two weeks. Collin Monsarrat, a trader at Birinyi Associates, saw little resolve in Wednesday's market. "If you read the paper every day, it's battles here, battles there ... explosions here, there," he said. "Combine that with the fact that the market is obviously in a correction and people are sitting on some nice gains here. They've made some good money, and they probably just want to take some off the table now." The 10-year Treasury note was down 4/32 in price to yield 3.70%, while the dollar was higher against the euro but lower vs. the yen. Crude oil and gold sagged. European markets closed lower, with London's FTSE 100 closing down 0.2% to 4309 and Germany's Xetra DAX off a fraction to 3726. In Asia, Japan's Nikkei closed up 0.7% to 11,365, while Hong Kong's Hang Seng was up 0.7% to 12,678. Investors trying to get a grip on sentiment amid all the choppiness this week might consider the Investors Intelligence survey, a widely followed poll of investors that's sometimes used as a contrary indicator. In the survey released Wednesday, the number of respondents calling themselves bulls tumbled, while those expecting a correction jumped. The number of flat-out bears held relatively steady.
Because the survey was completed last week, the numbers contribute to an understanding of what happened Monday when the Dow lost 1.3% and the Nasdaq tumbled 1.6%. Going forward, however, conventional wisdom reckons the survey as bullish, on grounds that market sentiment has a habit of being wrong most of the time. "That's a good thing," said Peter Dunay, chief market strategist at Wall Street Access. "People were way too bullish there for a while. The funny thing about contrarianism is that it really works well at the extremes. So a real sharp drop in bullishness like this is a positive. People are getting concerned enough that you have probably shaken out some of the sellers." Dunay's chief concern for the economy is that high energy prices will eat into a significant portion of the expected fiscal stimulus provided by the Bush tax cuts. "For companies that we're relying on to ramp up their business spending and to increase their hiring, these commodity prices are going to chew into their revenues," he said. "So I think we have to maintain modest expectations for employment and maybe trim our earnings growth expectations." A report on durable goods orders out from the Census Bureau snapped a three-session lull in economic news. Orders for durable goods in February increased 2.5%, beating Wall Street's expectations of a 1.2% rise. Orders in January fell a revised 2.7%. The government also reported that new home sales rose an unexpected 64,000 to 1.163 million units in February, well beyond forecasts, which called for a slight decline. January's number was revised down to 1.099 million. The European Union announced a $613 million fine for Microsoft ( MSFT) and gave it 90 days to produce a version of Windows without its up 26 cents, or 1.08%, to $24.41.
In other corporate news, CIBC upgraded shares of Time Warner ( TWX) despite fourth-quarter subscriber losses at its America Online unit and a string of disappointing quarters for the media giant's cable operations. The firm said expectations and estimates have been lowered sufficiently for the company to meet or beat Wall Street expectations over the next 12 to 18 months. Its shares closed up 4 cents, or 0.2%, to $16.45. CSFB upgraded shares of Best Buy ( BBY), citing positive valuations after a recent decline in stock price. The firm also upgraded Bed Bath & Beyond ( BBBY). Best Buy shares closed up 83 cents, or 1.82%, at $46.44, while Bed Bath & Beyond finished up 4 cents, or 0.1%, at $38.84. Late Tuesday, Red Hat ( RHAT) reported fourth-quarter earnings of 3 cents a share, in line with Wall Street's estimate and an improvement over breaking even in the same period last year. Its shares closed up 60 cents, or 3.09%, at $20.01. On Thursday, the government will release final GDP numbers for the fourth quarter of 2003 at 8:30 a.m. EST. Economists expect the 4.1% annualized growth rate reported in late February to remain unchanged. Also, the Labor Department is expected to report that initial unemployment claims in the week ended March 20, numbered 338,000, up from 336,000 claims counted the previous week. The Conference Board's Help Wanted Index for February, due out at 10:00 a.m. EST is expected to gain a point to 39, while economists are forecasting that existing home sales, expected from the National Association of Realtors, will tally 6.20 million units for February, up from January's 6.04 million. Earnings releases are due out before the opening bell from Conagra Food ( CAG), expected to report third-quarter earnings of 38 cents a share, up from last year's 30 cents a share; A.G. Edwards ( AGE), expected to post fourth-quarter earnings of 55 cents a share, up from 26 cents a share; and Sharper Image ( SHRP), which is expected to earn $1.40 a share in its fourth quarter, up from $1.20 a share in the same quarter last year. Stocks ended little changed Tuesday as lingering terrorism fears kept buyers from making any major bets. The Nasdaq Composite lost 8.1 points, or 0.42%, to 1901, while the S&P 500 shed 1.49 points, or 0.14%, at 1093.91. The Dow Jones Industrial Average closed down 1.11 points, or 0.01%, at 10,063.64.