NEW YORK (CNN/Money) -
A late session blue chip rally boosted the Dow and helped the Nasdaq cut its losses Wednesday, after a tough session in which oil prices touched a new 21-year high.
The Dow Jones industrial average (up 31.93 to 10,117.07, Charts) gained 0.3 percent, having been in negative territory throughout the session. The Standard & Poor's 500 (up 0.59 to 1,095.42, Charts) index closed just above unchanged, also having spent the session in the red.
The Nasdaq composite (down 10.84 to 1,858.26, Charts) lost 0.6 percent, recovering from steeper losses during the session that had pushed it near where it closed in early October 2003.
Analysts said that some short-covering and a bounce off the multimonth lows enabled the market to recover.
"I think the Nasdaq probably bottomed Monday, and we're in the process overall of making a very meaningful bottom," said Robert Philips, president and chief investment officer at Walnut Asset Management. "The next couple of days will likely continue to be volatile, but I think we'll bounce off that bottom after that."
"Oil remains the wild card," he added.
Stocks had tumbled throughout the session on a mix of higher oil prices, some disappointing corporate earnings and mixed economic news.
Oil prices set a record during the session, with NYMEX light crude futures briefly hitting a 21-year high of $43.05 a barrel before pulling back. Crude closed the session at $42.90, up $1.06 a barrel.
Prices have been rising for the last few days, but they got an extra lift Wednesday on global supply after Russian oil firm Yukos was reportedly ordered to stop sales.
"There's been all this talk that a spike in oil prices doesn't hurt as much as it did 20 or 30 years ago," said Douglas Altabef, managing director at Matrix Asset Advisors, "but the fact is it hits the economy and it hits corporate profits."
After the close of trade, R.H. Donnelly (RHD: Research, Estimates) said it would buy the Midwest yellow page directories of Dow component SBC Communications (SBC: Research, Estimates) for $1.42 billion.
Thursday brings earnings before the bell from Aetna (AET: Research, Estimates), Bristol-Myers Squibb (BMY: Research, Estimates), Duke Energy (DUK: Research, Estimates), Exxon Mobil (XOM: Research, Estimates).
Also due before the bell: the weekly jobless claims report, expected to show that 340,000 people filed new claims for unemployment last week, up from 339,000 the week before.
Blue chips bounce
After languishing in mostly negative territory through the session, the Dow managed to bounce back, thanks to strength in select issues, including Verizon Communications (VZ: up $0.84 to $38.70, Research, Estimates) and Honeywell (HON: up $0.76 to $38.11, Research, Estimates), which both added 2 percent.
Dow stock Boeing (BA: up $0.79 to $49.01, Research, Estimates) rose after the company reported quarterly earnings that grew from a year earlier, topping expectations, and forecast that 2005 results would exceed estimates, due to increasing jet sales.
Disappointing earnings and forecasts had pummeled the Nasdaq during the session, keeping it weaker even when the broader market staged a comeback.
University operator Career Education (CECO: down $10.87 to $33.63, Research, Estimates) fell more than 24 percent in active Nasdaq trade. The company, which is being probed by federal security regulators, warned that third-quarter results will miss expectations. The company also reported higher second-quarter earnings, although student enrollment numbers in the quarter were weaker than expected.
Communications gear maker UTStarcom (UTSI: down $7.40 to $17.85, Research, Estimates) plunged more than 29 percent. The company reported earnings, revenue and gross margins that rose from a year earlier but were short of expectations. UTStarcom also warned that current-quarter results would miss estimates, due to problems with its supply chain.
PeopleSoft (PSFT: up $0.38 to $17.70, Research, Estimates) declined after it reported earnings and revenue late Tuesday that rose from a year earlier, but missed expectations. The company also warned that 2004 earnings would fall shy of expectations due to the impact of Oracle's hostile takeover bid on demand for its software.
CNN/Money parent Time Warner (TWX: down $0.26 to $16.65, Research, Estimates) fell after reporting higher operating earnings compared with a year earlier and boosting its forecast for 2004 profit.
Market breadth was negative but much improved from the morning. On the New York Stock Exchange, losers beat winners by a small margin on volume of 1.54 billion shares. On the Nasdaq, decliners topped advancers by more than three to two as 1.83 billion shares changed hands.
The morning's economic news was mixed. The June read on durable goods orders initially unnerved the market. Orders rose 0.7 percent, after falling a revised 0.9 percent in May. Economists surveyed by Briefing.com expected a rise of 1.5 percent.
The afternoon release of the Federal Reserve's "Beige Book" helped the markets recover some, as it said little about the economy that wasn't already implied in the recent economic data.
Among other commodities markets, COMEX gold gained $2 to settle at $391.80 an ounce.
Treasury prices were higher with the 10-year note yield slipping to 4.58 percent from 4.61 percent late Tuesday. The dollar gained versus the yen and was little changed versus the euro.
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