Stocks turn higher in rocky trade
U.S. markets get a boost from economic news and better-than-expected earnings reports, despite credit concerns.
NEW YORK (CNNMoney.com) -- Stocks bounced into the black Wednesday morning after dual economic reports showed a dip in inflation and a surprise increase in pending home sales.
The tech-heavy Nasdaq composite index (down 11.39 to 2,534.88, Charts) gained 0.1 percent.
All three major gauges opened lower on the heels of a stock sellloff Tuesday after American Home Mortgage Investment Corp. (up $0.06 to $1.10, Charts) said that lenders had cut off its access to credit and that it may have to liquidate its assets. The mortgage provider also said it wouldn't be able to fund $450 million to $500 million of loans.
A third Bear Stearns (down $0.13 to $121.09, Charts, Fortune 500) hedge fund that is reportedly in jeopardy also added to jitters. The Wall Street Journal reported Tuesday night that a Bear Stearns fund with about $900 million in mortgage investments is refusing to return investors' money. Shares of the investment bank opened lower.
But stocks turned higher after the Institute for Supply Management reported that nationwide manufacturing activity fell to 53.8. Economists expected the closely watched index to slip to 55.5 for July from 56 in June. But any reading above 50 is a sign of growth in that sector.
And, the National Association of Realtors' pending home sales index jumped 5 percent to 102.4 in June. Economists surveyed by Briefing.com had forecast the index would another slip 0.6 percent after a revised 3.7 percent drop in the May report.
In other corporate news, Rupert Murdoch finally won his battle for the publisher of the Wall Street Journal. Dow Jones (up $0.76 to $58.14, Charts) agreed to be taken over by News Corp. (up $0.15 to $21.27, Charts) for $5.6 billion.
Time Warner (down $1.59 to $36.63, Charts), which owns CNNMoney.com, reported second-quarter earnings that topped analysts' estimates and said it has authorized an additional $5 billion stock repurchase.
Shares of Qwest Communications (down $0.23 to $8.30, Charts, Fortune 500) also fell 3.5 percent after the telecommunications carrier said second-quarter profit rose, but came in short of expectations.
U.S. auto sales are on tap for later in the session, with sales tracker Edmunds.com forecasting an 8 percent drop in industrywide sales, with General Motors (up $0.06 to $32.46, Charts, Fortune 500) and Ford (down $0.06 to $8.45, Charts, Fortune 500) both expected to post far larger declines. This could be the first month on record that domestic brands fall below 50 percent of overall U.S. sales.
Treasury prices turned lower. The yield on the benchmark 10-year note rose to 4.76 percent from 4.74 percent late Tuesday. Bond prices and yields move in opposite directions.
Oil prices eased ahead of the the government's weekly report on crude inventories, due at 10:30 a.m. ET, after setting a record close Tuesday. U.S. light crude for September delivery lost 39 cents to $77.82 a barrel in electronic trading.
The dollar gained against the euro and was little changed versus the yen.