Updated from 4:04 p.m. EDTStocks swung in a 110-point range Wednesday but ended where they started as mixed earnings news and a cautious Federal Reserve economic outlook left investors flummoxed. The Dow Jones Industrial Average, having been both up and down as many as 55 points during the session, ended lower by 1.20 points, or 0.01%, at 11,102.51. The S&P 500 dipped 0.48 point, or 0.04%, to 1268.40, and the Nasdaq Composite fell 3.44 points, and 0.17%, to 2070.46. "The market is searching for direction as we haven't seen much to give investors conviction," said Edgar Peters, chief investment officer with Pan Agora. "Everything is a bit ambiguous, and it's keeping the market from deciding on a direction. We saw a big volatile bounce without the follow-through. We should expect this type of behavior until the Fed meeting." About 1.81 billion shares changed hands on the New York Stock Exchange, with advancers beating decliners by a 9-to-7 margin. Volume on the Nasdaq was 2.09 billion shares, and falling stocks edged those that rose 8 to 7. The 10-year Treasury bond was up 7/32 in price to yield 5.03%, and the dollar fell against the yen and euro. In the day's main economic report, the Federal Reserve's beige book found "evidence that the pace of growth has slowed" from June to mid-July. Most districts reported lower retail sales showed weakening economic conditions. Also, the report noted that price inflation remained modest, but that "manufacturers' and retailers' ability to pass cost increases on to final prices varied." "The report provided further evidence that the economy is moderating," said Michael Sheldon, chief market strategist with Spencer Clarke LLC. "Investors are taking this as news that the Fed is near the end of its two-year tightening cycle. It looks that inflation is remaining contained." Following the release of the beige book, rate hike odds for 5.50% at the Aug. 8 Federal Open Market Committee meeting slipped to 40% from 54% before the report and 58% yesterday. To view Gregg Greenberg's video take on today's market,
On Thursday, the Commerce Department is expected to say that durable-goods orders bounced back by 2% in June after falling by 0.2% in May. Fighting between Israeli troops and Lebanon-based Hezbollah militants continued as world leaders gathered in Rome to discuss a plan to calm the hostilities. The diplomats agreed to support an international military force along the border of the countries, but they didn't recommend an immediate cease-fire. The gathering was reportedly heated at times, partly because four U.N. workers were killed during an Israeli air strike Tuesday. "We're on track for second-quarter earnings to be in the double-digit growth range, and guidance has been pretty good," said Peter Cardillo, chief market strategist with S.W. Bach & Co. "The lingering geopolitical problems, though, are resurfacing." Dow component General Motors ( GM) jumped 4.4% despite reporting a $3.2 billion loss in its second quarter related to its plan to pay employees to leave the company. Before charges, GM earned $2.03 a share on better-than-expected revenue growth. The stock gained $1.34 to close at $32. Meanwhile, the Dow was pressured by Boeing ( BA), which had a charge-related loss in its second quarter. The jet builder raised 2007 earnings guidance to $4.25 to $4.45 a share, roughly in line with analyst estimates. Boeing tumbled $3.85, or 4.6%, to $79.90. Amazon ( AMZN) shares tanked after the company reported a second-quarter profit of $22 million, or 5 cents a share, on $2.14 billion in sales. The profit number missed estimates by 2 cents a share. The stock plunged $7.33, or 21.8%, to finish at $26.26. "We've seen a tremendous amount of volatility, with earnings winners seeing large gains while earnings losers are severely punished," Sheldon said. "Economically sensitive stocks are getting the market's attention. However, it seems like the winners with positive guidance are certainly being rewarded."
Oil climbed after an Energy Department report showed crude inventories were unchanged last week. Gasoline inventories fell a greater-than-expected 3.2 million barrels. September crude rose 19 cents to close at $73.94 a barrel. Falling oil prices helped kick-start a late-session rally in New York on Tuesday, sending the Dow to a 53-point gain and the Nasdaq up by 12 points. Over the first two trading days of the week, the Dow rose 235 points, and the Nasdaq climbed 54. Crude's advance had the Philadelphia Oil Service Sector Index higher by 2.7%, while the Amex Oil Index gained 1.7%. Elsewhere, both the Dow Jones Transportation Index and the Philadelphia Semiconductor Sector Index ended down 0.1%. In other earnings, Lucent's ( LU) third-quarter earnings fell by a little more than half to $79 million, or 2 cents a share, matching estimates. Sales fell 4% from a year ago to $2.05 billion. Lucent tacked on a penny, or 0.5%, to $2.09. Corning ( GLW) shares were roughed up after the company reported an adjusted second-quarter profit that beat estimates but guided lower for the current period. Corning reported a 6% decline in sales and an 18% plunge in profit at its LCD unit in the second quarter. Shares of Corning dove 14.5%, ending the session down $3.13 at $18.52. ConocoPhillips ( COP) said it had second-quarter earnings of $5.19 billion, or $3.09 a share, up from $3.14 billion, or $2.21 a share, last year. Results easily topped the Thomson First Call average estimate of $2.81 a share for the quarter. ConocoPhillips rose $1.15, or 1.7%, to $68.60. Phelps Dodge ( PD) said second-quarter earnings fell to $471.1 million, or $2.32 a share, from $682.3 million, or $3.38 a share, a year ago. Results included an after-tax charge of $514.6 million, or $2.53 a share, for mark-to-market adjustments on 2006 and 2007 copper collars and copper put options. Analysts expected EPS of $4.17 on revenue of $3.16 billion, according to Thomson First Call. Shares slid $1.61, or 2%, to $77.82.
Kimberly-Clark ( KMB) said second-quarter earnings dropped to $377.6 million, or 82 cents a share, from $421.8 million, or 88 cents a share. Excluding items, the company earned 95 cents a share, beating the Thomson First Call average estimate by a penny. Kimberly-Clark added 90 cents, or 1.5%, to $61. Biotech company Biogen Idec ( BIIB) swung to a second-quarter loss of $170.6 million, or 50 cents a share, compared with a year-ago profit of $34.5 million, or 14 cents a share. Excluding items, Biogen earned 57 cents a share, ahead of the Thomson First Call consensus of 49 cents. Biogen lost 58 cents, or 1.4%, to close at $40.97. Away from earnings, Hewlett-Packard ( HPQ) said it will purchase Mercury Interactive ( MERQ) in a deal worth $4.5 billion. The all-cash acquisition, announced late Tuesday, prices Mercury at $52 per share, a 33% premium above its closing price. H-P climbed 42 cents, or 1.3%, to $31.75. Mercury shares soared, finishing up $10.75, or 27.6% to $49.75. Overseas markets were mostly higher, with London's FTSE 100 adding 0.4% to 5856 and Germany's Xetra DAX up 0.3% to 5583. In Asia, Japan's Nikkei fell 0.8% overnight to 14,884, and Hong Kong's Hang Seng gained 0.2% to 16,617. On Thursday, earnings reports are expected from Comcast ( CMCSA ), Exxon Mobil ( XOM ), Boston Scientific ( BSX ), Coca-Cola Enterprises ( CCE ) and Wendy's ( WEN ), among others.