NEW YORK ( TheStreet) -- Stocks closed flat Wednesday, despite improving signs for the economy in data and the Federal Reserve's beige book, after President Obama called on lawmakers to push forward on health care reform. The beige book, which examines anecdotal economic conditions throughout the country, was released at 2 p.m. EST. The report found that while economic activity remains slow, the 12 districts reported modest improvements that were more widespread than the central bank's last report. The beige book, which will be used as a reference for the Federal Open Market Committee's meeting on March 16, also found housing and labor markets remain weak, and price pressures continue to be subdued. But in a speech at about the same time, President Obama urged Congress to schedule a final vote on a health care bill, saying that the debate over the legislation has run its course. >>Thomson, DreamWorks: Best Media Stocks Stocks sank soon after. The Dow Jones Industrial Average, which was up more than 50 points earlier in the session, lost 9 points, or 0.1%, at 10,397. The S&P 500 added about half a point to 1119, and the Nasdaq finished largely flat at 2281. Though the sell-off was broad, health care stocks also lost ground soon after the president's speech, with the NYSE Health Care Sector Index slumping 0.2%. Some major drug manufacturers finished in the red. Passage of a reform bill could spell mounting fees on the pharma industry. Already lagging
because of a disappointing phase III study with partner Medivation ( MDVN), Pfizer ( PFE) turned in the Dow's worst performance of the session. Fellow blue-chips Merck ( MRK) and Johnson & Johnson ( JNJ) lost 0.5% and 0.1%, respectively. Financial and chip stocks also struggled Wednesday, as the KBW Bank Index and the Philadelphia Semiconductor Index lost 0.4% and 0.9%, respectively. Shares of Ford ( F), Citigroup ( C) and Bank of America ( BAC) saw the highest volume on the New York Stock Exchange, which had a listed volume of nearly 4 billion. The major averages had posted modest gains earlier in the day on strong data and an emerging plan to address Greece's debt problem. In response to calls from eurozone leaders for significant deficit-reduction measures, Greek Prime Minister George Papandreou approved a 4.8 billion euro ($6.5 billion) austerity plan that includes public sector pay cuts, reductions to government spending on public works and steep tax increases.
John Sitilides, a government relations and international specialist with Trilogy Advisors in Washington, D.C., said the challenge to Papandreou will be enacting the difficult measures without fueling social unrest, while European leaders and international investors determine whether the measures are deep enough to restore long-term confidence in the country's ability to repay lenders and issue government bonds. "Voters in the eurozone powers are very reluctant to have their tax dollars used in any way that is deemed as a bailout for Greece," Sitilides said, adding that there may be a call for even deeper measures. "Eurozone voters may want the toughest medicine possible to maintain confidence in the eurozone." "The light at the end of the tunnel is that if Greece can eventually climb out of the abyss of government debt with a restructured political economy that minimizes tax evasion, eliminates widespread corruption and reforms stagnant labor laws, it welcomes foreign direct investment to energize its economy and enhance its competitiveness," Sitilides said. Papandreou meets with German Chancellor Angela Merkel on Friday and with President Obama on March 9. Earlier, the latest employment report from Automatic Data Processing ( ADP) showed the private sector lost 20,000 jobs in February, meeting Wall Street's expectations and improving from a revised 60,000 jobs lost in January. ADP originally had reported 22,000 job losses in January. A separate report from Challenger, Gray and Christmas showed that job cuts declined 41% in February, 77% lower than the same time a year ago. Demand for services improved in February, according to the Institute for Supply Management's nonmanufacturing index, which showed a reading of 53. The level exceeded economists' expectations for a reading of 51 and also improved from last month's level of 50.5. Jay Suskind, senior vice president at Duncan Williams, emphasized the importance of the month's reading since manufacturing has shown strength, but the U.S. economy is driven by services. "It's a net positive for the marketplace," said Suskind, who attributes the day's gains to the services data. "It just reinforces the line that this is a slow-moving recovery, but that's what the market likes to see: slow and steady with no surprises.
"There's the hope that we don't slip into a double dip but also that the Fed won't have to act too quickly," he added. In housing news, the Mortgage Bankers Association said mortgage-loan application volume rose by a seasonally adjusted 14.6% in the week ended Feb. 26, while refinancing applications increased 17.2%. A weaker U.S. dollar, which was trading 0.6% lower, according to the Dollar Index, was also lifting commodities higher. Crude oil for April delivery traded $1.19 higher to settle at $80.87 a barrel, and the April
gold contract added $5.90 to finish at $1,143.30 an ounce. The benchmark 10-year Treasury weakened 3/32, strengthening the yield to 3.621%. The Energy Information Administration said crude oil inventories gained 4.1 million barrels in the week ended Feb. 26, which exceeded the 1.1 million-barrel rise that analysts polled by Platts had been expecting. Gasoline supplies were also higher than anticipated, adding 700,000 barrels on the week compared with analysts' calls for a rise of 160,000 barrels. Distillates stockpiles lost 900,000 barrels, which wasn't far off from estimates for a decline of 975,000 barrels. Late Tuesday, the American Petroleum Institute said crude oil inventories gained 2.67 million barrels last week. Shares of Novell ( NOVL) gained $1.33, or 28%, to $6.08 on news that its board will review a $2 billion buyout offer from private equity firm Elliot Associates. SouthWest Water's ( SWWC) stock soared 46.8% to $10.38 after it agreed to be acquired by institutional investors for $275 million in cash. Costco ( COST) reported a 25% increase in fiscal second-quarter earnings and a 9% rise in same-store sales. Shares shed $1.14, or 1.1%, to $60.68. BJ's Wholesale ( BJS) reported fourth-quarter earnings that missed analysts' estimates by a penny. The company's 2010 guidance also fell short of Wall Street's estimates. Shares of Joy Global ( JOYG) went higher by 5.9% at $54.51 after the mining-equipment company lifted its year-end earnings expectations. Overseas, Hong Kong's Hang Seng dropped 0.1%, and Japan's Nikkei gained 0.3%. The FTSE in London rose 0.9 %, and the DAX in Frankfurt increased 0.7%. -- Written by Sung Moss and Melinda Peer in New York