Updated with Fed's beige book and Treasuries.NEW YORK ( TheStreet) -- The Federal Reserve said the pace of economic decline is slowly moderating, but that did little for investors weary from a drop in oil prices and Chinese stocks Wednesday. On the bright side, all three major indices closed off of their lows for the day. The Dow Jones Industrial Average ultimately fell 26 points, or 0.3%, to 9070.72, and the S&P 500 gave up 4.47 points, or 0.5%, to 975.15. The Nasdaq Composite edged down 7.75 points, or 0.4%, to 1967.76. Wall Street turned its eye from earnings to crude oil Wednesday as futures tumbled $3.88 to $63.35 after the American Petroleum Institute and Energy Information Administration reported larger-than-expected stockpile builds. The Philadelphia Oil Service Sector index fell 3.3%, and integrated oil stocks PetroChina ( PTR) and ConocoPhillips ( COP) -- which also reported earnings -- lost 4.2% and 3.5%, respectively. Click the button below to hear Darin Newsom, senior commodities analyst at DTN, discuss what to make of the supply-and-demand equation in crude oil in an interview originally posted Tuesday. Industrials and commodities led a 5% decline in China's benchmark Shanghai Composite Index, adding to investor anxiety around the world early on. A weak U.S. Treasury auction of 5-year notes didn't help. Neither did the Federal Reserve's beige book report, which said that data from its 12 districts suggest economic activity continued to be weak going into the summer, "but most Districts indicated that the pace of decline has moderated since the last report or that activity has begun to stabilize, albeit at a low level." Spells of late-day buying led to a higher close on Monday and a mixed close Tuesday on what would have otherwise have been down sessions. That resiliency in addition to improved data on housing has been noted by market-watchers as a potentially bullish sign.
"The market rally may consolidate for the next several weeks -- some up days and some down, and even a mild correction -- but overall we are headed higher on stocks by year-end," writes Peter Morici, a professor at the University of Maryland School of Business and former chief economist at the U.S. International Trade Commission. Still, others, like Matthew Smith, vice president of Smith Affiliated Capital, argue this is still a bear market rally. Click the button below to get Smith's take on earnings and the economic recovery. A bit of economic data also diverted attention from earnings as the Department of Commerce reported a larger-than-expected decline in big-ticket items, or durable goods, in June. Orders fell 2.5%, vs. expectations for an 0.6% decline and a 1.3% increase the month prior. But factoring out transportation, orders rose by a greater-than-expected 1.1%. "The core stayed solid," writes Morici. "Equity markets may read this report negatively, but a combination of good and bad news on the economy will continue for the next several months," Morici said, adding that the proportion of good news will increase. "That's the way turnarounds become expansions." As for earnings, Sprint shares plummeted 11.8% to $4.05 after it reported a widened and wider-than-expected second-quarter loss on declining subscribers and revenue. WellPoint ( WLP) shares were also off, by 5.7% at $41.28, after the health insurer said profit fell by a less-severe-than expected 7.6% with some help from its programs for the elderly.
Time Warner ( TWX) said its second-quarter profit dropped 34%. That was also better than expected on an adjusted basis, and it reaffirmed its full-year outlook, although revenue was weaker than anticipated. Shares gave up 1.8% to $26.52. Elsewhere, ConocoPhillips said its profit fell 76%, but that was still better than expected. Revenue was halved and didn't live up to expectations. In other news, Yahoo! ( YHOO) and Microsoft ( MSFT)confirmed their Internet-search partnership on Wednesday. Stocks overseas were mixed. In Europe, Frankfurt's DAX and London's FTSE 100 were up 1.9% and 0.4%, respectively. In Asia, Hong Kong's Hang Seng lost 2.4%, while Japan's Nikkei tacked on 0.3%. Longer-dated Treasuries were rising in price, falling in yield. The 10-year was up 5/32 to yield 3.66%, while the 30-year added 16/32, yielding 4.52%. -- Reported by Elizabeth Trotta in New York.