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NEW YORK (CNN/Money) -
Stocks slipped Wednesday as investors ignored falling oil prices and instead focused on long-term interest rates that hit seven-month highs and mixed quarterly earnings.
As of 6:00 p.m. ET, Nasdaq and S&P futures point to a modestly lower open for stocks Thursday, when fair value is taken into account.
The Dow Jones industrial average (down 32.89 to 10,344.98, Charts) lost 0.3 percent. The broader S&P 500 (down 5.16 to 1,191.38, Charts) index and the Nasdaq composite (down 9.40 to 2,100.05, Charts) both lost just over 0.4 percent.
Treasury bond prices retreated, pushing the yield on the benchmark 10-year note to 4.59 percent, its highest level in seven months. (Full story.) Bond prices and yields move in opposite directions.
That overshadowed a nearly 3 percent slide in oil prices. U.S. light crude oil for December delivery fell $1.78 to settle at $60.66 a barrel on the New York Mercantile Exchange.
"We have oil prices coming down, but yields are moving back up, and that's basically what's weighing on the market," Peter Cardillo, chief market analyst at S.W. Bach and Co.
Bond yields have risen for three straight sessions on bets that interest rates are set to keep rising. Rate increases tend to drag on stocks as they increase business expenses and cut into consumer spending, which fuels two-thirds of the economy.
The run up in bond yields began Monday following the announcement that Ben Bernanke is the Bush administration's choice to replace outgoing Federal Reserve chairman Alan Greenspan.
On a broader level, "the market is trying to gauge an outlook for 2006 and it's reacting daily to the earnings forecasts, the bond market and oil," said James Awad, president at Awad Asset Management. "So far, it's a standoff."
Thursday brings reads on news home sales, weekly jobless claims and durable goods orders. Earnings are due before the bell from Dow Chemical, Exxon Mobil, Verizon Communications and others.
What moved?
Amazon.com (down $6.43 to $39.74, Research) tumbled almost 14 percent after reporting lower earnings late Tuesday that missed estimates. The online retailer also issued a fourth-quarter revenue forecast that sets the midpoint below that of Wall Street analysts, suggesting slower revenue growth.
Flextronics (down $2.90 to $9.20, Research) slumped 24 percent in active Nasdaq trade after reporting fiscal second-quarter earnings Wednesday that missed forecasts and issuing a third-quarter profit outlook that is below estimates. The maker of products for Microsoft, Dell and others blamed its weak outlook on slower demand.
A number of telecom and networking shares tumbled, dragging down the Amex Networking (down 4.76 to 226.13, Charts) index by 2 percent.
Among the components weighing on the index, Lucent Technologies (down $0.18 to $2.93, Research) slumped nearly 6 percent after reporting weaker quarterly earnings that nonetheless edged analysts' forecasts. Looking forward, the company forecast that growth in its wireless business would slow in the year ahead.
Guidant (down $2.25 to $62.45, Research), Medtronic (down $0.23 to $56.74, Research) and St. Jude Medical (down $0.75 to $47.52, Research) all declined after the government subpoenaed the medical device makers as part of an ongoing investigation into implantable heart devices.
Dow component Boeing slipped 2.7 percent after reporting quarterly earnings that grew from a year ago but missed forecasts. Revenue slipped from the previous year, due to a four-week strike by airline assembly workers. The company also boosted 2005 and 2006 earnings estimates.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than two to one on volume of 1.83 billion shares. On the Nasdaq, decliners topped advancers almost three to two as 1.87 billion shares changed hands.
The dollar gained versus the euro and yen.
COMEX gold fell $1.70 to settle at $473 an ounce.
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