Updated from 4:17 p.m. ESTA selloff in shares of Intel ( INTC) dragged the tech sector lower Wednesday, while strength in energy and mining stocks minimized the losses for blue chips. The Dow Jones Industrial Average, coming off its latest record close, slipped 5.44 points, or 0.04%, to 12,577.15, and the S&P 500 gave back 1.28 points, or 0.09%, to 1430.62. The Nasdaq Composite was the worst performer of the major indices, dropping 18.36 points, or 0.74%, to 2479.42. Volume was again strong, with 2.76 billion shares changing hands on the New York Stock Exchange. Advancers narrowly edged decliners. Nearly 2.34 billion shares traded on the Nasdaq, and losers outpaced winners 9 to 7. After the prior session, Intel said its fourth-quarter profit sank 39% year over year but topped analysts' estimates. Sales in the three months ended Dec. 30 totaled $9.7 billion, at the high end of the company's guidance. However, what proved unsettling to investors was word from the chipmaker that its pricing battle with AMD ( AMD) isn't letting up. Shares of Intel slumped $1.26, or 5.7%, to $21.04. Intel was the biggest drag on the Dow industrials, and the Philadelphia Semiconductor Sector Index, of which it's also a component, lost 0.8%. On the plus side, the Amex Gold Bugs Index rose 0.6%, and the Amex Oil Index was up 1%. Edgar Peters, chief investment officer with Pan Agora, said the market should take its future direction from economic data, not earnings releases.
"The problem is that earnings don't say much about the future," said Peters. "Those reports have already been priced in. Investors are worried about what the Federal Reserve will do. We could see a lot of sideways activity because of this." Wall Street was somewhat hemmed in by the release of the Labor Department's producer price index for December. The headline index was up 0.9%, higher than expectations for an increase of about 0.5%. The so-called core index, which excludes food and energy prices, rose 0.2%, also ahead of expectations. The core rate rose 2% year over year. The data swung the pendulum back toward the hawks in the debate about the Fed's next interest rate move. Policymakers have said incoming economic data are their primary focus in the run-up to the next two-day Fed meeting, which begins Jan. 30. "The Fed looks to be on hold indefinitely," said Barry Hyman, equity market strategist with EKN Financial. "There hasn't been a deterioration of inflation that would make the Fed comfortable yet. The lower energy prices will certainly help the inflation story, but there currently isn't enough data for the Fed to believe inflation has come down far enough." Separately, the central bank said that December industrial production rose 0.4%, above estimates for a 0.1% increase. Capacity utilization rose 0.2% to 81.8, in line with expectations.
Meanwhile, U.S. economic activity continued to expand at a moderate pace between mid-November and December, according to the Fed's regional business survey known as the beige book. The report said most districts characterized growth as moderate. Labor market conditions tightened in a number of districts, while home and auto-related producers were a drag on manufacturing and sales. During a speech Wednesday afternoon, San Francisco Fed President Janet Yellen said that her view on inflation is more benign than worrisome because "inflationary pressure may be easing" because of lower oil prices. Back to equities, JPMorgan ( JPM) said fourth-quarter profits rose to $4.53 billion, or $1.26 a share, from $2.70 billion, or 76 cents a share, last year. Earnings easily exceeded analysts' expectations. Shares edged higher by 4 cents, or 0.1%, at $48.43. Fellow Dow component McDonald's ( MCD) was trading higher after the restaurant chain said it expects fourth-quarter earnings of 61 cents a share. The forecast is ahead of the Thomson First Call average estimate of 58 cents a share. McDonald's tacked on 29 cents, or 0.7%, at $44.86. Elsewhere, homebuilder Lennar ( LEN) posted a quarterly loss, and earnings fell at Southwest Airlines ( LUV). This afternoon, Apple ( AAPL) will report its latest numbers. Apple finished down $2.15, or 2.2%, at $94.95 ahead of the release. Away from stocks, oil prices halted their downtrend ahead of Thursday's weekly inventory report, as the near-month futures bounced after falling below $50.50 a barrel. Crude finished the session higher by $1.03 at $52.24. Most other energy contracts also rebounded.
According to Bloomberg, crude inventories are expected to have eased by 900,000 barrels last week. Distillate supplies probably rose by 1.5 million barrels, while gasoline stocks are expected to have climbed by 2.5 million barrels. The Energy Department will release its report one day later than usual because of the Martin Luther King Jr. holiday on Monday. Precious metals also gained ground. Gold added $7.40 to close at $633.30 an ounce, and silver was higher by 15 cents to $12.78 an ounce. The benchmark 10-year note was down 6/32 in price, yielding 4.78%. The dollar fell against the world's major currencies. Overnight in Asia, Japan's Nikkei added 0.3% to 17,261, and Hong Kong's Hang Seng was up 0.2% to 20,064. In Europe, London's FTSE 100 was down 0.2% to 6204. Germany's Xetra DAX was easing 0.2% to 6701.