Stocks end higher
Wall Street shakes off the worst of the session's weakness to close with gains, despite higher oil prices and more financial sector worries.
NEW YORK (CNNMoney.com) -- Wall Street managed slim gains Wednesday, following a choppy session influenced by fluctuating oil prices, more woes for the financial sector and a smaller-than-expected decline in manufactured goods.
The Dow Jones industrial average (INDU) and the broader Standard & Poor's 500 (SPX) index both added 0.4%. The Nasdaq composite (COMP) added 0.2%.
Stocks rose in the morning on lower oil prices and a smaller-than-expected decline in durable goods orders. But investors struggled to sustain those gains throughout the session as oil prices see-sawed. A late-session advance in select shares helped the major gauges close higher.
Financial shares were under pressure after Citigroup said AIG may need to raise more capital and regional bank KeyCorp. warned that its going to have to write off more loans that haven't been repaid than it initially thought.
After rising from mid-March to mid-May, stocks have been struggling of late, as market participants look for more clarity on the economy and the outlook for inflation, said Alan Lancz, president of Alan B. Lancz & Associates.
"There are still a lot of uncertainties, with the consumer continuing to get hit by the housing crunch and by higher gas prices," Lancz said. He said that in such an environment, Wall Street is going to have a hard time getting back to the October highs, when the Dow & S&P 500 hit all-time records and the Nasdaq hit a more than six-year high.
Commodity prices in particular seem to be directing the day-to-day direction of the stock market, following a period in which investors were less focused on rising oil and gas prices, said Dan Genter, president and CEO at RNC Genter Capital Management.
"Before, people were somewhat immune to the rise in oil prices because it was getting caught in the brush fire with weak earnings, slowing GDP growth and a bigger pick up in inflation," Genter said.
"Now that the flames aren't as high, everyone is focused on it," he said. "They're worrying about how high prices will go, what impact it will have on earnings and on the consumer."
Thursday brings readings on gross domestic product growth, the weekly jobless claims and the weekly oil inventories report.
After the close Wednesday, it was announced that Federal Reserve Governor Frederic Mishkin will resign following the August 5 Fed policy meeting, to return to teaching at Columbia University.
Oil and gold prices: U.S. light crude oil for July delivery rose $2.18 to settle at $131.03 on the New York Mercantile Exchange. Oil prices had fallen Tuesday in response to the stronger U.S. dollar, which makes dollar-traded commodities like oil more expensive for international buyers.
Gold retreated in response to the stronger dollar. COMEX gold for August delivery fell $7.80 to settle at $905 an ounce.
Gas hits 21st record high: The national average price for a gallon of regular unleaded gas rose to a record $3.944 from the previous day's record of $3.937, AAA reported.
Durable goods orders: Orders for manufactured goods fell 0.5% in April, the government reported, after dropping a revised 0.3% in March. The decline was smaller than the 1.5% economists were expecting. (Full story).
Company news: A variety of financial shares declined, led by AIG (AIG, Fortune 500). Citigroup Global Markets cut its price target to $41 from $47 and said that the insurer - which closed a $20 billion capital raising last week - may need to raise additional funds.
KeyCorp (KEY, Fortune 500) warned that 2008 charge offs - loans to be written off as not having been repaid - will be higher than it previously anticipated, sending shares of the regional bank tumbling in active trading. Shares fell 10.4%.
UPS (UPS, Fortune 500) will be providing some air shipping services to DHL, the struggling U.S. unit of Germany's Deutsche Post. The 10-year deal is expected to bring in as much as $1 billion a year in additional revenue for UPS. Shares gained 3%.
American Eagle Outfitters (AEO) reported weaker quarterly earnings that managed to top forecasts, and forecast second-quarter earnings in a range that could top current estimates. Shares jumped 8%.
Market breadth was positive. On the New York Stock Exchange, winners beat losers on volume of 1.21 billion shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 1.84 billion shares.
Other markets: The dollar gained versus the euro and yen.
Treasury prices tumbled, raising the yield on the 10-year note to 4% from 3.92% late Monday. Bond prices and yields move in opposite directions. 
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