Updated from 4:13 p.m. EDTThe stock market had a choppy session Wednesday, and at the end of trading blue chips closed little changed while tech stocks finished modestly positive. The Dow Jones Industrial Average was down 0.32 points at 10,216.59, and the S&P 500 fell 0.84 points to 1176.84. The Nasdaq Composite rose 9.75 points, or 0.48%, to 2047.22. "We had a nice turnaround in the Nasdaq today," said Peter Cardillo, chief market analyst with S.W. Bach & Co. "Bottom line, I think we may be very close to a turnaround as soon as the market discounts a barrage of bad news, such as higher energy prices, higher inflation and murky fourth-quarter earnings results." The Dow was pressured by losses of 1.4% or more in Altria ( MO), Boeing ( BA) and Caterpillar ( CAT). Meanwhile, Johnson & Johnson ( JNJ) was the Dow's best performer, up 3.8%. About 1.81 billion shares changed hands on the New York Stock Exchange, with two stocks falling for every one that rose. On the Nasdaq, trading volume was 1.81 billion shares, and decliners and advancers were even. "We're still working toward an oversold position," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "The sentiment is very negative, shown in the advancers vs. decliners over the last couple days. So far we've had a mixed bag of earnings, which hasn't helped either." The Dow started trading Thursday down 352 points, or 3.3%, thus far in October, while the S&P 500 was off 51 points, or 4.2%, and the Nasdaq had lost 115 points, or 5.4%. In other markets, the 10-year Treasury was down 5/32 in price to yield 4.47%, while the dollar rose against the yen and euro. At the Nymex, the November crude contract fell $1.04 to close at $63.08 a barrel, while gasoline futures were lower by 7 cents at $1.76 a gallon.
Earlier, the Energy Department released its latest weekly inventory data. The report showed that U.S. oil stocks rose by 1 million barrels, while 2.7 million barrels of gasoline were drawn down. Distillate stores fell by 3.4 million barrels. "The events we've had for the last week still haven't changed," said Art Hogan, chief market analyst with Jefferies. "We still have concerns about high energy prices, interest rates and earnings growth deceleration. We're in a time where we're going to hear a lot about these things, too. We're probably going to be getting more bad news than good news, even if we don't hear the hurricanes as an excuse." On the economic front, the Commerce Department said the U.S. trade gap widened in August by 1.8% to $59 billion. Economists expected the gap to grow to $59.5 billion. Meanwhile, the Labor Department said the U.S. import price index jumped 2.3% in September, the highest rise in 15 years. Economists had expected the price index to increase by 0.9%. Excluding oil, the index was up 1.2%. The Labor Department also said initial jobless claims fell by 2,000 to 389,000 for the week ended Oct. 8. The four-week moving average declined by 8,750 to 395,750. After the close Wednesday, Dow member McDonald's ( MCD) raised its third-quarter earnings guidance to 56 cents a share, 2 cents better than the Thomson First Call consensus. The fast-food chain also reported higher same-restaurant sales in the U.S. for September, although the rate of growth was lower than in three previous months. Shares gained 38 cents, or 1.2%, to $32.05. A day after Prudential cut its rating and lowered its price target on Dow component Intel ( INTC), Merrill Lynch recommended the stock as a buy ahead of the semiconductor maker's third-quarter results, which are scheduled for Oct. 18.
The firm believes concerns over market-share losses and excess manufacturing capacity are already priced into the stock. Intel fell 4 cents, or 0.2%, at $23.20. Despite Intel's decline, the Philadelphia Semiconductor sector index rose 2.1% after gains of 3% or more in Advanced Micro Devices ( AMD), KLA-Tencor ( KLAC) and Marvell Tech ( MRVL). Another member of the Dow, DuPont ( DD), said third-quarter earnings should meet analysts' estimates. The chemicals giant also plans to repatriate about $9.4 billion of cash by the end of the year under the American Jobs Creation Act. The company will take a third-quarter charge of 32 cents a share. Additionally, DuPont estimated that plants damaged by the recent Gulf Coast hurricanes will cost $150 million, or 10 cents a share, to clean up. The stock was down 44 cents, or 1.1%, to $38.23. At Time Warner ( TWX), reports say Google ( GOOG) and Comcast ( CMCSA) are in advanced discussions toward buying a minority stake in America Online. The deal could value the Internet division at $20 billion, according to reports. Time Warner added 10 cents, or 0.6%, to $17.59. Google was lower by $3.53, or 1.2%, to $297.44. Comcast was down 72 cents, or 2.6%, to close at $27.20. In earnings news, Lam Research ( LRCX) said its first-quarter profit slid 45% to $49.5 million, or 35 cents a share. The per-share result was a nickel better than expected, and the shares surged 11.8% to close at $33.75. Newspaper company Tribune ( TRB) reported third-quarter net income of $24 million, or 7 cents a share, including a loss of 43 cents a share related to a tax ruling. Excluding the tax item, the company would have earned about 50 cents a share, 2 cents ahead of the Thomson First Call consensus estimate. Third-quarter revenue fell 0.8% to $1.4 billion. Tribune rose 77 cents, or 2.4%, to $32.58.
Hospital operator HCA ( HCA) said it expects third-quarter earnings of 61 cents to 63 cents a share on revenue of $6 billion. The company said the outlook includes costs of 5 cents a share from hurricanes Katrina and Rita, as well as a tax benefit of $22 million from the repatriation of foreign earnings. The Thomson First Call consensus is for EPS of 66 cents on revenue of $6.03 billion. HCA also announced plans to buy back up to 50 million shares through a $2.5 billion Dutch auction, which is expected to begin on Oct. 14. Shares of HCA were higher by 16 cents, or 0.3%, to close at $46.53. Arris Group ( ARRS) said late Wednesday that it now expects third-quarter earnings of 16 cents to 18 cents a share on revenue between $197 million and $201 million, thanks to strong demand. Previously, the telecom company had expected EPS of 12 cents to 15 cents and revenue between $180 million to $190 million. Shares added 77 cents, or 7.1%, to $10.15. Shares of hard drive maker Maxtor ( MXO) finished lower after J.P. Morgan analysts lowered their investment rating to underweight on concerns about the pace of a turnaround. Maxtor fell 23 cents, or 5.4% to $4. J.P. Morgan downgraded Seagate Technology ( STX) to neutral from overweight, citing concerns over industry economics into 2006. Seagate lost 48 cents, or 3.1%, to $14.99. Overseas stocks were mostly lower, with London's FTSE 100 down 1.4% to 5265 and Germany's Xetra DAX off 0.6% to 4950. In Asia, Japan's Nikkei lost 0.1% overnight to 13,449, while Hong Kong's Hang Seng inched up 0.3% to 14,622.