NEW YORK (CNN/Money) -
The Dow industrials and the Nasdaq composite ended a tumultuous session Wednesday much as they ended the first quarter -- with modest declines.
Weaker-than-expected manufacturing sector reports, worries about Friday's monthly employment report and the continued rise in oil prices all impacted the session.
Wednesday, the Dow Jones industrial average (down 24.00 to 10357.70, Charts) lost 0.2 percent, the Nasdaq composite (down 6.41 to 1994.22, Charts) lost 0.3 percent and the Standard & Poor's 500 (down 0.79 to 1126.21, Charts) index closed just below unchanged. All three had been weaker for most of the session before attempting to rally, but then fell back.
Bond and gold prices surged, and the dollar fell.
For the quarter, the Dow lost about 0.9 percent, the Nasdaq lost nearly 0.5 percent. The S&P 500 was the lone gainer, up about 1.3 percent.
Of jobs and energy prices
After rallying for most of 2003 and through early 2004, the major indexes flattened out for seven weeks, before turning lower in March.
"We had a correction, partly because the market had this huge run and everyone was looking for a correction, and partly in response to the weak February payrolls number," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "We had a bounce off that correction Monday and Tuesday, but concerns remain."
"I'd say the biggest concern right now is certainly oil," Ghriskey added. "The gas pump is squeezing the consumer and the consumer is what has kept the economy going."
Add to that concerns about the still lagging labor market, and you have a stock market reluctant to move much, analysts say.
"The volume's been low the past few sessions, and that tells you there's no enthusiasm," said John Hughes, a market analyst at Shields & Co. "People may be expecting that the payrolls number Friday will be good, but they are not willing to bet on it too much yet. So you're seeing this tentative trade."
Thursday will bring the national manufacturing report from the Institute for Supply Management, as well as the long-delayed February read on producer prices, but the week's biggest news on the economy will come with Friday's March labor market report.
The unemployment rate is expected to hold steady at 5.6 percent, according to economists surveyed by Briefing.com. But employers are expected to have added 123,000 jobs to payrolls, according to the forecasts, after adding a surprisingly low 21,000 last month.
A return to hiring would be welcomed by investors who feel that the lagging labor market is the last factor in an economic recovery. However, the other side of the argument says that if hiring is starting to truly pick up, a coupling with strong earnings from businesses -- as they are expected to do in the first quarter and beyond -- might put pressure on the Federal Reserve to raise interest rates sooner than some investors might like.
This tug of war, and the continued aftermath of the 2003 and early 2004 stock rally, has left Wall Street in a bit of a funk during the first three months of 2004.
Market movers
Among the stocks on the move, a number of large-cap technology issues pulled back, including Microsoft (MSFT: down $0.27 to $24.93, Research, Estimates), which fell 1 percent and Intel (INTC: down $0.23 to $27.20, Research, Estimates), which lost 0.8 percent.
Shares of computer data storage maker QLogic (QLGC: down $9.69 to $33.00, Research, Estimates) fell 22.7 percent in active Nasdaq trade after the company warned that fiscal fourth-quarter results would miss estimates because of a dip in expected orders for computer networking gear.
Other data storage stocks fell, too, including Emulex (ELX: down $1.48 to $21.29, Research, Estimates), which dropped 6.5 percent, and Brocade Communications (BRCD: down $0.45 to $6.64, Research, Estimates), which lost 6.3 percent.
Electronics retailers Best Buy (BBY: up $3.32 to $51.72, Research, Estimates) and Circuit City (CC: up $0.60 to $11.30, Research, Estimates) both reported higher-than-expected earnings.
Best Buy's stock added 6.9 percent after the company reported a profit of $1.42 per share, 3 cents higher than what analysts were expecting and up from $1.16 per share a year earlier. The company also raised its current quarter and full-year forecasts because of strong sales.
Circuit City gained 5.6 percent after it said it earned 46 cents per share, 10 cents more than what analysts surveyed by First Call were expecting and more than it earned a year earlier. The company also said that it is buying smaller rival InterTan (ITN: up $1.72 to $13.97, Research, Estimates) for $284 million in cash. InterTan rallied about 14 percent.
Market breadth was positive. On the New York Stock Exchange, where 1.47 billion shares traded, gainers beat winners by about five to three. On the Nasdaq, where 1.83 billion shares traded, advancers edged decliners by eight to seven.
Released in the early morning, the Chicago Purchasing Managers Index, a reading on manufacturing in the Midwest, dropped to 57.6 this month from 63.6 in February. The index was expected to recede to 61.0 in March, according to Briefing.com. Any reading above 50 indicates that the manufacturing sector is expanding.
Separately, factory orders rose a meager 0.3 percent in February, against expectations for a gain of 1.5 percent after a 0.5 percent decline in January.
Traders also kept a keen eye on oil prices. Despite requests to the contrary, OPEC said it will support crude output cuts, starting Thursday. In commodities trading, NYMEX light sweet crude oil futures fell 49 cents to settle at $35.76 per barrel, pulling back from a bigger drop earlier. COMEX gold rallied $5.50 to settle at $428.30 per ounce.
The dollar remained sharply lower versus other major currencies, failing to recover from damage done early in the day by a rumor that Federal Reserve Chairman Alan Greenspan had suffered a heart attack, which the Fed quickly denied.
Treasury prices gained following the release of the economic reports. The 10-year note climbed 1/2 of a point in price, its yield moving down to 3.83 percent from 3.89 percent late Tuesday. Treasury prices and yields move in opposite directions.
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