Stocks End Mixed as Oil Skids
Stocks edned narrowly mixed as a new earnings season approached and crude-oil prices continued to fall.
The Dow Jones Industrial Average rose 14.81 points, or 0.2%, to 8178.41 after its 161-point slide Tuesday. Component Alcoa rose 0.5% ahead of its second-quarter report. After the bell, the aluminum maker announced a smaller-than-expected quarterly loss. Intel, which will be the new Dow component to report earnings next week, slid 1.9%.
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The S&P 500-stock index fell 1.47 point, or 0.2%, to 879.56 as its financial sector sank 1.7%. The Nasdaq Composite Index rose one point, or 0.1%, to 1747.17. The Russell 2000 fell 4.57 points, or 0.9%, to 479.68.
Alcoa's release marks the symbolic start of the broader reporting season, which is likely to be lackluster. Wall Street is expecting an eighth straight quarter of declining profits in the S&P 500, led by raw-materials producers, whose year-ago numbers will be tough to beat after the bursting of a multi-year commodity bubble last summer.
The broad Dow Jones-UBS Commodity Index fell 2.6%, off more than 50% from its record set more than a year ago. Oil futures, which have been under particularly heavy pressure lately, sank $2.79 to settle at $60.14 a barrel after a weekly report showed a build in U.S. fuel inventories. Oil has fallen six straight days, tumbling 16% over that span.
How the stock market, which has suffered a correction in recent weeks after a springtime rally, will weather a grim profit season is also a key question. Some analysts and traders are guardedly optimistic, hoping that much of the bad news has been factored into stock prices during recent bouts of selling like the one on Tuesday.
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Bloomberg News/Landov Commodity futures and options traders work on the floor of the New York Mercantile Exchange yesterday. Oil futures have been under pressure.
"A little bit of trepidation ahead of earnings season is usually a good thing," said strategist Jeffrey Kleintop, of LPL Financial Services in Boston. "People are looking for businesses to say that they saw some improvement in their businesses during the quarter. The ones who don't say that will be penalized, but there's also room now for the ones who do say it to be rewarded."
According to Thomson Reuters, analysts expect the S&P 500's components to show a decline of about 36% in second-quarter earnings.
Ashwani Kaul, global head of research at Thomson Reuters, said the index's profits could "surprise" about four percentage points above the expectations, with Alcoa's report likely to play a more important tone than usual in setting the tone for the broader reporting season.
The aluminum maker is traditionally the first Dow component to report its results -- a distinction that traders in recent years have found less and less important. But under the current circumstances, Mr. Kaul said Alcoa could offer an important window onto the state of U.S. housing and manufacturing, key areas that will need to revive for there to be an end to the recession.
Treasury prices surged as investors sought safe harbor. The 10-year Treasury note climbed 1-9/32 to yield 3.301%. The dollar fell against the yen and rose against the euro.
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