Fed Keeps Stocks in Check

Updated from 4:14 p.m. EDT

Next week's Federal Reserve interest rate meeting kept traders from taking big positions Friday, and stocks, after an uneven session, closed modestly lower.

The Dow Jones Industrial Average finished down 30.02 points, or 0.27%, at 10,989.09, and the S&P 500 lost 1.10 points, or 0.09%, to 1244.50. The Nasdaq Composite slipped 1.52 points, or 0.07%, to 2121.47.

The Nasdaq got limited support from a 6.7% gain in Sirius Satellite Radio ( SIRI) and a 4% rise in Oracle ( ORCL).

"All bets are off until the Fed meets and gives us some certainty to the next step, and today was a perfect display of that," said Jay Suskind, head of institutional equity trading with Ryan Beck & Co. "If the statement gives us some uncertainty, we'll struggle. The market will only be able to stabilize if we have some certainty."

For the week, the Dow lost 25 points, or 0.2%. The Nasdaq and S&P 500 notched losses of 0.4% and 0.6%, respectively.

Volume was low again, with about 1.41 billion shares moving on the New York Stock Exchange. Decliners matched advancers. About 1.60 billion shares changed hands on the Nasdaq, where losers edged winners 8 to 7.

Michael Sheldon, chief market strategist with Spencer Clarke, said that over the short term, the market has room to move higher. "Based on a number of readings, the amount of bearish sentiment indicates higher prices over the near term," he said. "We're still concerned over a slowing economy, though."

The 10-year Treasury bond was down 3/32 in price to yield 5.22%, and the dollar rose against the yen and euro.

One factor that figured into trading was the Commerce Department's report that durable-goods orders unexpectedly fell 0.3% in May. Economists expected the data to show that orders for long-lasting products such as appliances and furniture rose by 0.4% last month after falling by 4.4% in April.

The report is one of the last big economic releases prior to the Fed's two-day meeting in Washington next week. Financial markets are currently pricing in 100% odds of another 25-basis-point rate hike, the 17th such increase in as many meetings. Odds of another hike in August currently sit near 85%.

"Interest rates are the focus today," said Peter Cardillo, chief market strategist with S.W. Bach & Co. "Durable goods is a volatile number and can be somewhat erratic. We still have concerns about an economic slowdown, which is a dark cloud over the market."

Commodity prices were mixed. August crude reversed early weakness and was up 31 cents to $71.15 a barrel in Nymex floor trading. Gold rose $2.60 to finish at $588 an ounce, and silver tacked on 7 cents to $10.28 an ounce. Copper added 10.5 cents to close at $3.24 a pound.

To view Gregg Greenberg's video take on today's market, click here

Dominating headlines in the U.S. was news of an alleged plot to bomb landmark buildings including the Sears tower in Chicago. Seven people, including six Americans, were arrested in Florida after an FBI probe into the alleged ring, which operated out of a city warehouse in Miami.

In corporate news, oil and gas company Anadarko Petroleum ( APC) is shelling out nearly $22 billion in cash to acquire Kerr-McGee ( KMG) and Western Gas Resources ( WGR).

Shares of Kerr-McGee surged 36.4% to close at $68.61, and Western Gas Resources jumped 45.9% to $59.67. Anadarko was lower by 7.2% to $44.90.

Another deal saw Energy Partners ( EPL) agree to buy fellow Louisiana oil and gas company Stone Energy ( SGY) for $51 a share. The buyout price values Stone's equity at $1.4 billion, but Energy Partners also plans to refinance about $800 million of the company's debt.

Energy Partners rose $1.15, or 6.4%, to $19.17, and Stone tacked on 48 cents, or 1%, to $46.71.

By sector, the Amex Oil index rose 3.5%, the Philadelphia Gold and Silver Sector index added 1.6%, and the Dow Jones Transportation Average gained 0.7%. The Philadelphia/KBW Bank Sector index ended down 0.9%, and the Philadelphia Semiconductor Sector index was off 0.8%.

Among earnings, Oracle detailed fourth-quarter earnings late Thursday that were in line with the updated guidance it released a week earlier. Profit rose 27% from a year ago on a 25% rise in revenue, and the company guided current-quarter results in line with forecasts. Oracle was higher by 57 cents, or 4%, to finish at $14.90.

Solectron ( SLR) swung to a third-quarter profit of $38.9 million, or 4 cents a share, excluding items, matching Wall Street estimates. The contract electronics manufacturer also guided fourth-quarter profit in line with forecasts. Shares rose 14 cents, or 4.2%, to $3.44.

Six Flags ( SIX) said that about halfway through its current quarter, revenue is down about 1% from a year ago. The company cited withdrawn discounts for its season passes and said per-guest spending was up 14%. The stock fell 25.5% on the news, down $1.90 to $5.55.

Among research moves, JPMorgan downgraded shares of Qualcomm ( QCOM), citing the possibility of an impasse in technology negotiations with Nokia ( NOK).

Qualcomm was off $1.88, or 4.5%, to finish at $39.50. Nokia dipped 8 cents, or 0.4%, to $19.49.

Elsewhere, Deutsche Bank raised Royal Dutch Shell ( RDS.A) to buy, and Merrill Lynch raised Advanced Micro ( AMD) to neutral.

Royal Dutch was higher by 22 cents, or 0.4%, to close at $63.65. AMD dropped 23 cents, or 0.9%, to $25.14.

Overseas markets were mixed. In London, the FTSE 100 rose 0.1% to 5692, and Germany's Xetra DAX was flat at 5530. In Asia, Japan's Nikkei lost 0.1% overnight to 15,124, and Hong Kong's Hang Seng slipped 0.1% to 15,809.

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