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Stock advance stunted
Shares move higher but gains limited as crude nears $59 a barrel and traders sell off shares.
December 21, 2005: 7:31 PM EST
By Steve Hargreaves and Grace Wong, staff writers

NEW YORK ( - Stocks snapped back Wednesday to break a four-session losing streak but gains were slim as rising crude prices weighed on investors.

As of 6 p.m. ET, Nasdaq and S&P futures pointed to a positive opening for stocks Thursday.

The Dow Jones industrial average (up 28.18 to 10,833.73, Charts) and the S&P 500 index (up 3.17 to 1,262.79, Charts) both gained nearly 0.3 percent Wednesday, while the Nasdaq composite (up 9.24 to 2,231.66, Charts) added about 0.4 percent.

After the bell, shares of Research in Motion (Research) rose 6 percent after the maker of the BlackBerry said third-quarter profit surged 33 percent and sales jumped 53 percent.

Bed Bath & Beyond (Research) also reported a rise in profit, but shares fell 5 percent in after-hours trading on the Inet electronic brokerage system as the company's sales fell short of analysts' expectations.

A string of deals in the technology sector sent stocks higher early in the session, but the morning rally faded as oil prices neared $59 a barrel and investors took the opportunity to recoup losses after four consecutive losing sessions.

Investors have been awaiting the traditional "Santa Claus" rally that typically takes the market higher in the last trading days of the year. Some are worried that the market has already seen its best gains this year, but others expect a boost before 2006.

"The year-end rally looked terrific in November, but it's been disappointing in December," said Ralph Acampora of Knight Capital Group.

He said a run-up at the end of the year is still in sight, but that rising oil prices and a stronger dollar have taken some steam out of the stock market's gains.

In the previous four sessions the Dow has lost 0.7 percent, the S&P has slipped 1 percent and the Nasdaq has fallen 1.8 percent. But the losses have been limited and it won't take much of a push for stocks to recover before the year is up.

Reversing losses

The morning stock jump was sparked by a report which said economic growth was a bit less robust in the third quarter than previously thought and prices picked up, though the pace of growth remained the strongest since early 2004.

Gross domestic product, or total output within U.S. borders, expanded at a 4.1 percent annual rate in the July-September quarter, the government said in its final estimate of growth for the period, down from its previous estimate of 4.3 percent.

David Briggs, head of equity trading at Federated Investors, said that although GDP was revised lower, investors were still happy that it remained above 4 percent.

But stocks lost some momentum after the weekly U.S. fuel inventory report said crude stocks rose but heating oil inventories fell.

U.S. crude for February delivery gained 47 cents to settle at $58.56 a barrel on the New York Mercantile Exchange.

What moved?

In corporate news, General Motors (Research) shares slipped 4 percent on Tuesday's news that shareholder Kirk Kerkorian had sold 12 million of his 56 million GM shares in order to take tax losses.

Shares of the Dow component hit a 23-year low Tuesday and have lost nearly 50 percent of their value so far this year.

But GM was one of the few Dow dark spots as 21 of the index's 30 issues rose. DuPont (up $0.85 to $42.80, Research), American International Group (up $1.02 to $66.44, Research) and Alcoa (up $0.69 to $28.99, Research) were among the big gainers while Disney (down $0.17 to $24.10, Research) and Honeywell (down $0.47 to $37.68, Research) joined GM in the decliner's bin.

Delivery company Fed Ex (up $5.21 to $103.70, Research) gained over 5 percent after the firm beat earnings estimates for the current quarter and raised its guidance.

Seagate Technology (up $0.63 to $20.23, Research) said Wednesday it will buy rival computer disk-drive maker Maxtor (up $2.41 to $6.93, Research) for $1.9 billion in stock, a deal that would pay a premium of 60 percent for Maxtor shareholders based on Tuesday closing prices.

Maxtor jumped 53 percent while Seagate rose 3 percent.

Technology stalwart IBM said it will buy software developer Micromuse (up $2.71 to $9.92, Research) for $865 million, sending Micromuse shares more than 37 percent higher.

Stun gun maker Taser International said a court dismissed a wrongful death suit against it, although the company remains entangled in a similar case. Taser (up $0.68 to $6.83, Research) shares jumped around 11 percent.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by five to three on volume of 1.5 billion shares. On the Nasdaq advancers beat decliners by a margin of about three to two as 1.7 billion shares changed hands.

Trade volume was normal on both exchanges despite a two-day-old transit strike in New York City.

Major markets in Asia and Europe also closed higher Wednesday.

Bond prices fell, lifting the yield on the 10-year Treasury to 4.48 percent from the 4.46 percent level reached late Tuesday. Bond prices and yields move in opposite directions.

The dollar rose slightly against the yen and euro, adding to Tuesday's big gain.

COMEX gold for February delivery fell $1.70 to $495.30 an ounce.  Top of page

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