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Is this the straw that breaks our backs?


Stocks Barely Mixed As Yield Curve Inverts
Wednesday January 25, 1:19 pm ET
By Ellen Simon, AP Business Writer
Stocks Barely Mixed As Yield Curve Inverts, Despite Mergers and Earnings News


NEW YORK (AP) -- Rising short-term bond yields flummoxed Wall Street Wednesday, leaving stocks barely mixed despite positive earnings news, two significant merger deals and a drop in oil prices.
In bonds, the yield curve inverted, meaning some short-term bonds traded at higher yields than longer-term maturities. Such inversions have traditionally been a warning sign of recession. Both the Standard & Poor's 500 and the Nasdaq composite drooped in afternoon trading.

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Wall Street started the session higher and then retreated despite The Walt Disney Co.'s long-awaited acquisition of Pixar Animation Studios Inc. and Boston Scientific Corp.'s winning bid for Guidant Corp. Xerox Corp. and others reported strong profits. And crude oil futures fell, dropping $1.36 a barrel to $65.70 on the New York Mercantile Exchange.

In early afternoon trading, the Dow Jones industrial average rose 19.37, or 0.18 percent, to 10,731.59.

Broader stock indicators were barely mixed. The Standard & Poor's 500 index rose 0.31, or 0.02 percent, to 1,267.17 and the Nasdaq composite index fell 1.09, or 0.05 percent, to 2,264.16.

Bonds fell as stocks rose, with the yield on the 10-year Treasury note rising to 4.45 percent from 4.39 percent late Tuesday. The dollar rose against other major currencies; gold prices also climbed.

In economic news, the National Association of Realtors said existing home sales dropped 5.7 percent in December to 6.6 million units. Economists had expected sales to come in at an annualized rate of 6.87 million, down from 6.97 million in November.

But mergers and earnings drove trading. Disney fell 34 cents to $25.65 after agreeing to acquire Pixar for $7.4 billion in stock. The deal will make Steve Jobs, Pixar's chief executive, the single largest shareholder of Disney stock, and he will have a seat on Disney's board. Pixar climbed 94 cents to $58.51.

Boston Scientific fell 51 cents to $23.49 after winning the battle for medical device maker Guidant Corp. with a $27.2 billion cash-and-stock deal that trumped a lower bid by Johnson & Johnson. Guidant fell $1.63 to $75.15, while Johnson & Johnson fell 49 cents to $58.87.

In earnings news, Xerox Corp. reported an 18 percent jump in fourth-quarter profits, but revenues dropped 2 percent and the stock slipped 30 cents to $14.16.

Drugmaker Bristol Myers Squibb Co. rose 35 cents to $21.68 after its quarterly profit beat Wall Street expectations by 3 cents per share despite slipping sales due to generic competition on a growing number of products.

Declining issues outnumbered advancers by roughly 8 to 7 on the New York Stock Exchange, where volume came to 811.05 million shares, compared with 790.76 million traded at the same point on Tuesday.

The Russell 2000 index of smaller companies fell 2.96, or 0.41 percent, to 715.06.

Overseas, Japan's Nikkei stock average rose 0.01 percent. Britain's FTSE 100 gained 1.25 percent, Germany's DAX index surged 1.74 percent, and France's CAC-40 gained 0.90 percent.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com