Wall St.'s wobbly Wednesday
Major gauges give up gains, turn weaker after volatile morning as investors assess credit and mortgage market woes, upbeat economic news.
NEW YORK (CNNMoney.com) -- Stocks struggled Wednesday afternoon, after a volatile morning session in which investors mulled ongoing fears about the credit and mortgage markets as well as upbeat economic news, including a mild reading on core inflation.
The Dow Jones industrial average (down 26.74 to 13,002.18, Charts) lost a few points around 2-1/2 hours into the session, struggling to hold above 13,000 after falling below it for the first time since April 25. The broader S&P 500 (up 1.60 to 1,428.14, Charts) index crept higher. The tech-fueled Nasdaq Composite (down 1.41 to 2,497.71, Charts) index was barely changed.
Stocks slumped Tuesday on fresh worries about the mortgage and credit markets and disappointing profit forecasts from retailers Home Depot and Wal-Mart Stores.
The concerns remained in place Wednesday. But after four straight days of declines for the Dow and Nasdaq, trading was more subdued, with stocks seesawing back and forth across the unchanged line as investors weighed the day's events.
On the upside: the July consumer price index (CPI) rose modestly, as expected, in terms of both overall and core inflation; the NY Empire State index, a regional manufacturing report, was stronger than expected; industrial production and capacity utilization both increased in July; and net foreign purchases jumped.
On the downside: oil prices jumped to above $74 a barrel; Applied Materials' revenue forecast disappointed; and financial stocks remained vulnerable to the worries about the credit and mortgage markets.
In other news, an industry report showed that the price of a typical home in the United States continues to drop, but at a slower pace than recently.
The Dow has lost nearly 1,000 points, or 7 percent, since topping the 14,000 level almost a month ago. And the market probably has further to go on the downside, before it moves back higher, analysts argue.
"I think we're in the midst of a correction and that we have a bit more to go on the downside," said Douglas Roberts, chief investment strategist for Channel Capital Research.
"But it's not unusual for stocks to pull back a bit after a big run up," he said. "As for the longer term, I don't think this is the start of a bear market."
Countrywide Financial (down $1.24 to $23.22, Charts, Fortune 500), the leading U.S. mortgage lender, slipped nearly 5 percent Wednesday after Merrill Lynch downgraded it to "sell" from "buy" on worries about the mortgage market, Briefing.com reported. On Tuesday, the company said that foreclosures and delinquencies rose in July to their highest level in several years.
Applied Materials (down $0.73 to $20.51, Charts, Fortune 500) slipped 3 percent after the chip gear maker said late Tuesday that current-quarter orders and revenue would fall from the last quarter. That overshadowed the company's otherwise upbeat quarterly sales and earnings report.
Blue chips were mixed, with Dow components Citigroup (up $0.30 to $45.96, Charts, Fortune 500), Microsoft (up $0.36 to $28.63, Charts, Fortune 500) and Home Depot (up $0.28 to $33.80, Charts, Fortune 500) among the gainers and Honeywell (down $0.69 to $55.68, Charts, Fortune 500), Boeing (down $1.77 to $95.86, Charts, Fortune 500) and Caterpillar (down $1.27 to $75.51, Charts, Fortune 500) leading the losers.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by five to three on volume of 750 million shares. On the Nasdaq, decliners topped advancers by a slim margin on volume of 950 million shares.
U.S. light crude oil for September delivery rose $1.72 to $74.10 a barrel on the New York Mercantile Exchange, gaining after a weaker-than-expected weekly oil inventories report and amid worries about a tropical storm approaching the Texas coast.
Treasury prices were little changed, with the benchmark 10-year note yield at 4.72 percent.
In currency trading, the dollar rose versus the euro and fell versus the yen.
COMEX gold for December delivery rose 30 cents to $680 an ounce.