Dow reverses course, finishes flat
Investors overcome early housing fears, troubling Merrill Lynch results, leaving 30-stock index unchanged at close.
NEW YORK (CNNMoney.com) -- Wall Street staged a late session rally Wednesday despite more housing market woes and dismal results from Merrill Lynch, leaving most major gauges lower except the Dow industrials which ended virtually unchanged.
The Dow Jones industrial average (Charts) finished flat based on early tallies, after falling by more than 200 points earlier in the day.
Treasurys staged a modest rally, lowering the yield on the benchmark 10-year note to 4.33 percent, down from 4.40 percent late Tuesday.
The dollar moved modestly lower against the euro and eased versus the yen.
Here's what was moving before the close:
Stocks got off to a slow start after Merrill (Charts, Fortune 500) reported a quarterly loss of $2.3 billion and said it was taking a larger-than-projected writedown of $7.9 billion because of losses from bad subprime mortgage bets.
The selloff accelerated after the National Association of Realtors said existing home sales sank more than expected last month, to its slowest pace on record. The industry group also revealed that the median home price fell 4.2 percent from a year ago in September.
Those two factors, combined with worries about the wildfire impact on the Southern California region and a jump in the price of oil, were creating something close to a "perfect storm" for traders, said Fred Dickson, chief market strategist at D.A. Davidson & Co.
Crude prices jumped more than $1 a barrel after U.S. oil inventories took a surprise dip in the latest week. Light, sweet crude for December gained $1.83 to settle at $87.10 a barrel on the New York Mercantile Exchange.
"A lot of bad news is swamping a reasonable list of good earnings reports," said Dickson. Traders seem to be focused on the negative news."
On the earnings front, Amazon.com (Charts, Fortune 500) saw its sales and earnings surge in the most recent quarter, the online retailer reported late Tuesday. But the results were not as robust as some investors had hoped, sending its shares tumbling nearly 12 percent on the Nasdaq.
On Wednesday, Dow component Boeing (Charts, Fortune 500) surprised investors by delivering a 61 percent jump in quarterly results that topped forecasts, while the company also raised both its earnings and revenue guidance for 2007.
And shares of Corning (Charts, Fortune 500) slipped 6 percent in morning trade after the telecom equipment maker said it expects its fourth-quarter earnings to fall short of analysts' estimates, even after it reported better-than-expected earnings.
Market breadth was negative as decliners topped advancers on the New York Stock Exchange by 2 to 1 on volume of 1.53 billion shares. Losers beat winners by nearly more than 2 to 1 in Nasdaq trading as 2.76 billions shares traded hands.