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NEW YORK (CNN/Money) -
Stocks ended mixed Thursday, dragged down by the soaring price of gas that may dent consumer spending and automakers' profits but buoyed by talk of a letup in interest rate hikes by the Federal Reserve.
The Dow Jones industrial average (down 21.97 to 10,459.63, Charts) and the Nasdaq composite (down 4.19 to 2,147.90, Charts) both ended down about 0.2 percent. The Standard & Poor's 500 index (up 1.26 to 1,221.59, Charts) added about 0.1 percent.
"The market has been holding up, despite how bad the news is," said David Briggs, head of equity trading at Federated Investors, referring to Hurricane Katrina and it's aftermath, which is the driving force behind most of the day's news.
In addition to the fallout from Hurricane Katrina, Briggs said $3 gasoline might affect third-quarter corporate earnings. "There's a lot of things people can blame stuff on," he said.
Supporting markets was news that President Bush and Fed Chairman Alan Greenspan had met to discuss the economic impact of Hurricane Katrina.
"We particularly spent a lot of time talking about the damage done to our energy infrastructure and its effect on the availability and price of gasoline," said Bush. "In our judgment, we view this storm as a temporary disruption that is being addressed by the government and by the private sector."
Alfred Goldman, chief market strategist at A.G. Edwards, said there is a growing chance that the Fed will slow down its interest rate raising campaign sooner than previously planned, in response to the storm.
Looking ahead, investors will await the August jobs report due Friday morning at 8:30.
The consensus forecast is 190,000, down from the 207,000 new jobs reported in July. The report is based on a midmonth survey, and will not reflect the impact of Hurricane Katrina, which slammed into New Orleans on Aug. 29, near the end of the month.
"(Jobs) have been one of the bright sports recently," said Briggs. "But it's hard for me to envision the market getting any kind of legs."
As of 5:30 p.m. EST, Nasdaq and S&P 500 futures pointed to a slightly higher open for the stock market Friday, when fair value is taken into account."
On the move
After the bell Thursday MGI Pharma Inc. (Research) and SuperGen Inc. (Research) tumbled after federal regulators said they needed more information before approving their experimental drug for an often-fatal bone marrow cancer.
And software maker Neoware Systems (Research) jumped after the firm beat earnings estimates by 5 cents a share.
Automakers slumped during normal trade on fears that rising gas prices would dent sales of big, gas-guzzling models -- the industry's most profitable.
Leading the decline was GM (down $1.22 to $32.97, Research), which fell more than 3 percent after it reported August sales 16.6 percent lower than they were in August 2004. Ford (Research) lost more than 2 percent and DaimlerChrysler (Research) slipped as well.
Airline stocks took a hit from soaring jet fuel prices. Northwest Airlines (down $1.06 to $3.97, Research) lost about 21 percent, Delta Airlines (down $0.12 to $1.04, Research) shed 10 percent, and Continental Airlines (down $0.70 to $12.67, Research) fell 5 percent.
Retailer Bebe Stores (down $5.57 to $17.95, Research) lost over 23 percent after it reported same-store sales for August that missed Wall Street's estimates.
Energy stocks led advancers, with Valero Energy Corp. (up $3.00 to $109.50, Research), Exxon Mobil (up $1.78 to $61.68, Research), Frontier Oil Corp. (up $4.55 to $41.20, Research), Sunoco (up $5.34 to $78.04, Research) and Pioneer Natural Resources (up $4.29 to $53.69, Research) all posting gains.
Among gainers, Swiss drugmaker Novartis (Research), which owns a 42 percent stake in U.S. vaccine maker Chiron (up $6.49 to $42.93, Research), said it offered $4.5 billion to buy the rest of the company. Chiron stock jumped abut 18 percent.
Shares of 7 Eleven (up $6.32 to $34.66, Research) rose 22 percent after it said it would review an offer from Seven & I Holdings Co. to buy out the company at a price of $32.50 a share.
Market breadth was positive. On the New York Stock Exchange, winners beat losers three to two on volume of 1.7 billion shares. On the Nasdaq, advancers nudged out decliners as 1.65 billion shares exchanged hands.
The morning saw a mixed batch of economic reports. Shares edged lower after a report from the ISM suggested U.S. manufacturing lost some momentum in August. The index fell to 53.6 from 56.6 in July.
But the major gauges gained traction after retailers reported solid sales in August, proving once again that consumers are withstanding soaring oil and gas prices. The government also said personal spending rose a robust 1 percent in July as expected, but personal income grew at a weaker-than-expected 0.3 percent rate.
Oil prices rose, with U.S. light crude oil for October delivery settling up 53 cents at $69.47 a barrel on the New York Mercantile Exchange.
But gasoline prices surged to record highs as consumers fearing a gas shortage flocked to the pumps. Drivers in areas across the country paid more than $3 at the pump as stations raised prices.
In other economic news, the Labor Department said weekly jobless claims climbed to 320,000 -- their highest level in nearly two months. Economists surveyed by Briefing.com had expected the reading to come in at 315,000.
Treasury prices were mixed, with longer-dated debt falling and short-term notes rising. The 10-year slipped to yield 4.03 percent from 4.01 percent late Wednesday. Treasury prices and yields move in opposite directions.
In currency trading, the dollar fell against the euro and the yen.
COMEX gold rose $8.40 to $446.50 an ounce.
In global trade, major Asian markets ended higher, with Tokyo closing at a four-year high. European shares also ended the session higher.
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