NEW YORK (CNN/Money) -
Blue chips fell Thursday, and the broader market was little changed after a choppy session and a rough week, as investors sought to position themselves amid rising interest rates, stubbornly high oil prices and the events in Iraq.
The Dow Jones industrial average (down 34.42 to 10010.74, Charts) fell 0.5 percent, while the Standard & Poor's 500 (down 0.84 to 1096.44, Charts) index and the Nasdaq composite (up 0.44 to 1926.03, Charts) both closed near unchanged.
The major indexes have been in a struggle for the better part of a week as investors have tried to digest the reality that interest rates are likely to rise as soon as June. As part of the process of preparing for the inevitable rise in rates, markets initially sold off sharply, hitting new 2004 lows, then tried to recover for the last few sessions.
Stocks initially tumbled sharply Wednesday, before staging a huge recovery by the close. Again on Thursday, the gauges see-sawed, ending in mixed territory.
"Investors are taking a 'wait and see' attitude," said Michael Carty, principal at New Millennium Advisors. "They want to see if the market has really bottomed after hitting the lows of the year earlier this week, and if the next leg of this is a rally. I tend to think it is."
The session's news was too mixed to provide clear hints. A big rise in the producer prices index (PPI), a key inflationary gauge -- revived fears that interest rates will need to rise soon, preventing stocks from extending Wednesday's rally.
Countering the inflationary implications of the PPI report Thursday was the April retail sales report, which showed a decline, and the weekly jobless claims report, which showed a small rise. In addition, a slew of strong earnings helped distract investors from interest rates worries.
Although the market has been preoccupied with rates for several months, the Fed watch has intensified recently, putting the pressure on economic news, oil prices and any other signs of inflation. Last week, the Federal Reserve hinted that rates would rise soon, and the April monthly employment report showed a second month of strong jobs growth.
"We've had this rough period over the last two months, and I think we've gotten to the capitulation point," said Art Hogan, chief market analyst at Jefferies & Co. "We'll keep reacting up and down a bit to the corporate news, the geopolitical news, but I don't think we'll see the kind of big selloffs we've been seeing. I think the trend is basically going to be sideways to up for the time being."
Friday, brings a number of key reports that should provide clues as to whether the Federal Reserve is likely to raise interest rates at its June 30 meeting.
Friday's most-closely watched report will likely be the April consumer prices index. Due before the opening bell, CPI is expected to have risen 0.3 percent after rising 0.5 percent last month. Prices excluding food and energy, or the core CPI, is expected to have risen 0.2 percent after rising 0.4 percent in March.
Reports are also due before the bell on business inventories, industrial production and capacity utilization. Shortly after the open, the University of Michigan releases its first reading on consumer sentiment for May, expected to rise to 96 from 94.2 in April.
After the close, Dell (DELL: down $0.65 to $35.80, Research, Estimates) reported first-quarter earnings and sales that rose from a year earlier and lifted its second-quarter outlook. However, shares fell more than 3 percent in after-hours trade, as investors fretted about profit margins.
What moved?
Philip Morris parent Altria (MO: down $0.90 to $48.90, Research, Estimates) continued to weigh on the Dow, losing 1.8 percent after losing 6.5 percent Wednesday. The tobacco industry was dealt a big blow Wednesday afternoon when the Florida Supreme Court ruled that it would review the dismissal of a $145 billion judgment against the industry. On Thursday, Goldman Sachs cut its rating on Altria to "in line" from "outperform."
Other big Dow decliners included United Technologies (UTX: down $1.03 to $83.46, Research, Estimates) and Merck (MRK: down $0.75 to $46.10, Research, Estimates).
On the upside, Walt Disney (DIS: up $0.30 to $23.30, Research, Estimates) rose 1.3 percent after reporting earnings late Wednesday of 26 cents per share, a nickel more than what analysts were expecting and up from a year earlier.
Wal-Mart Stores and smaller rival Target both reported strong earnings Thursday morning.
Wal-Mart Stores (WMT: up $0.19 to $55.25, Research, Estimates) reported a profit of 50 cents per share, a penny above expectations and more than what it earned a year earlier. The company also boosted its full-year target for earnings, despite acknowledging concerns that higher gas prices will hurt sales. Shares inched higher.
Target (TGT: down $1.18 to $43.17, Research, Estimates) said it earned 48 cents per share, a penny more than expected and up from a year earlier. But its shares fell 2.6 percent.
On the Nasdaq, heavily-traded web search stock Mamma.com (MAMA: up $2.78 to $13.21, Research, Estimates) rallied nearly 27 percent after the company posted quarterly earnings and revenue late Wednesday that more than doubled from a year earlier.
Oracle (ORCL: up $0.21 to $11.80, Research, Estimates) gained 1.8 percent, but many other heavily-weighted Nasdaq stocks were flat to weaker.
Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven as 1.4 billion shares traded. On the Nasdaq, decliners beat advancers by four to three as 1.51 billion shares changed hands.
Wholesale prices up, retail sales down
Released before the open, PPI rose 0.7 percent in April after rising 0.5 percent in March. Economists surveyed by Briefing.com were expecting it to have risen 0.3 percent. The so-called "core PPI," which excludes food and energy prices, rose 0.2 percent, the same as it did in March and in line with expectations.
Retail sales fell a larger-than-expected 0.5 percent versus an upwardly revised 2.0 percent gain in March. Sales excluding the volatile auto component fell 0.1 percent, down from the previous month, but not as weak as economists were expecting.
In addition, jobless claims rose to 331,000 last week from 318,000 the previous week, a number that was higher than expected.
Worries about higher oil prices remained. NYMEX light sweet crude oil futures rose 34 cents to $41 a barrel, near recent all-time highs. COMEX gold fell $2.80 to $374.90 an ounce.
Treasury prices edged lower. The 10-year note lost 9/32 of a point in price for a yield of 4.84 percent, up from 4.81 percent late Wednesday. The dollar rose versus the yen and euro.
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