Stocks Close Mixed; Dow Industrials Shed 5.46
By Erin Schulte
The Wall Street Journal Online
With the Republican National Convention crowding traders out of Manhattan and Friday's big report on August employment looming, stocks made little progress again Wednesday.
The Dow Jones Industrial Average closed down 5.46 at 10168.46 and the S&P 500- stock index moved up 1.67 to 1105.91. Tech stocks outpaced the broader market, with the Nasdaq Composite Index climbing 12.31 to 1850.41.
Market watchers had expected inconsequential action on Wall Street this week.
"The Street began deserting the ship late last week as the Republicans swarmed into Manhattan for their convention. And that exodus has left many of their juniors running the desks with specific instructions not to be bold," said Jeffrey Saut, chief investment strategist at Raymond James. "In other words -- don't take any big risks with the firm's money."
Rising oil prices, meanwhile, kept bullishness in check. After dropping about 15% from record highs recently, crude oil surged $1.88 to settle at $44 a barrel Wednesday in reaction to a surprisingly steep decline in U.S. oil inventories. It was the biggest one-day increase in three months in dollar terms.
The Energy Information Administration reported that U.S. commercial inventories of crude oil declined by a 4.2 million barrels to 287.1 million barrels last week. The American Petroleum Institute, a trade group, reported an even larger inventory decline of eight million barrels.
Most analysts had predicted inventories to remain steady or increase slightly. Meanwhile, there were reports of continued violence in Iraq, where insurgents reportedly blew up a northern pipeline.
Economic reports on construction spending and manufacturing came in mixed, giving those traders who did make it to work little to go on.
The Institute for Supply Management's August manufacturing index fell to 59 from 62 in July, a shade below the reading of 60 economists had expected and the first time in nine months the index fell below 60. Readings above 50 indicate expansion in the sector. Separately, the Commerce Department said construction spending rose 0.4% in July, in line with expectations.
Friday, the August report on U.S. nonfarm payrolls is expected to show growth of 150,000 jobs. After two months of subpar growth, investors are looking to see if a third month confirms the trend. In July, employers added just 32,000 nonfarm jobs to their payrolls, well below what economists had expected.
Among stocks in the news, eBay agreed to buy additional shares in South Korea's Internet Auction Co. in a cash deal estimated at $325 million, raising eBay's stake in the company to nearly 86% from about 62%. EBay said it intends to pursue a tender offer for the remaining shares of Internet Auction in the coming weeks. Shares rose 1.3%.
Detroit's Big Three posted lower vehicle sales for August, amid steep gasoline prices and signs lavish incentives have lost some of their allure with consumers in a wavering economy. General Motors shares slipped, Ford dropped 1.5% and American depositary shares of DaimlerChrysler inched higher.
A pair of health-care stocks drew attention. Boston Scientific, under pressure from a major recall of its coronary stents, provided an update on its business performance for 2004. Forest Laboratories, meanwhile, said initial Phase III trial results of the company's Alzheimer's disease treatment, neramexane, showed no statistical difference between the drug and existing treatments. Boston Scientific shares rose 7.1%, while Forest shares sank 8.4%.
Shares of Corinthian Colleges jumped 23% after the for-profit education company reported earnings of 20 cents a share, beating Wall Street estimates of 19 cents a share and matching the year-earlier figure for the quarter. The company said its fourth-quarter revenue rose to $217.1 million from $138.9 million a year ago. For fiscal 2004, revenue increased 55% to $804 million.
Overseas, stocks gained ground. In London, the FTSE closed up nearly 1%, helped by strong performances from oil stocks. Japan's benchmark Nikkei 225 Stock ended up 0.4% as bargain hunting lifted real estate and other domestic- demand related stocks.
In major U.S. market action Wednesday:
Stocks were mixed. On the Big Board, where 1.14 billion shares traded, 2,059 stocks rose and 1,231 fell. On the Nasdaq Stock Market, where 1.43 billion shares changed hands, 1,815 stocks advanced and 1,228 declined.
Bonds slipped. The 10-year Treasury note lost less than 1/8 point, or $1.25 for each $1,000 invested. The yield, which moves inversely to price, rose to 4.119%. The 30-year bond was down less than 1/8 point to yield 4.929%.
The dollar was mixed. It traded at 109.50 yen, up from 109.23 yen late Monday in New York. The euro rose against the dollar to $1.2187 from $1.2177.
Dow Jones Newswires
09-01-041713ET
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