Stocks slogged through a disappointing session Thursday, with stocks finishing slightly lower as investors consolidated their holdings despite solid corporate earnings reports and the biggest drop in consumer prices in 56 years.
Tumbling gasoline prices pushed November’s consumer price index down 0.6 percent, the biggest one-month decline since July 1949, according to the Labor Department. Investors considered the drop a good omen for the holiday shopping season. Core CPI, with food and fuel prices removed, rose a modest 0.2 percent, in line with economists’ forecasts.
With the Federal Reserve closely watching inflation, the CPI figures bode well for future interest rates. “This gives the Fed a lot more flexibility, a little more elbow room in figuring out when to stop raising rates,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “Continuing stable inflation figures like the ones we saw today helps everybody.”
Yet investors remained unconvinced, selling off riskier small-cap stocks, along with technology and energy shares that led the November rally, and moving to larger, more established companies — apparently hedging their bets against Wall Street’s now-traditional January letdown.
The Dow Jones industrial average was down 1.84 points, or 0.02 percent, at the close, while the broader Standard & Poor’s 500-stock index was off 1.80 points, or 0.14 percent. The technology-laced Nasdaq composite index gave up 1.96 points, or 0.09 percent.
Oil declined after the government said domestic crude oil inventories increased, reducing fears of tight supply during the peak-demand Northern Hemisphere winter. A barrel of light crude was at $59.99, down 86 cents on the New York Mercantile Exchange.
A slight rise in first-time jobless claims may have damped some of the enthusiasm on Wall Street. First-time unemployment filings rose to 329,000 last week, more than the 320,000 new claims economists expected. The rate of unemployment claims is still considered consistent with decent employment growth.
The Dow received a boost from Altria Group Inc., which surged $2.89, or 3.92 percent, to $76.62 after the Illinois Supreme Court threw out a $10 billion judgment against the Dow component over Philip Morris’ “light” cigarettes.
In earnings news, Lennar reported a 53 percent surge in fourth-quarter profits due to improvements in its homebuilding process and a record number of homes built for the year. Lennar, which beat Wall Street profit forecasts by 20 cents per share, rose $2.03 to $62.61.
Bear Stearns rose $6 to $116.50 after the investment firm said strong stock trading and clearing revenues led to a 15 percent jump in profits for the fourth-quarter, setting a new quarterly record. Bear Stearns beat analysts’ estimates by 27 cents per share.
Rival Wall Street firm Goldman Sachs Group Inc., while posting a record 2005, missed analysts’ full-year profit projections, and its quarterly profits merely met Wall Street’s forecasts. Goldman Sachs slid $1.33 to $128.30.
Fresh merger activity also drew investor interest. Collegiate Funding Services Inc. surged $4.36, or 28.55 percent, to $19.63 after JPMorgan Chase & Co. said it would buy the education loan provider for $633 million, or $20 per share, in cash.
North Carolina bank BB&T Corp. slipped 12 cents to $43.05 after announcing the purchase of Atlanta-based Main Street Banks Inc. in an all-stock deal for $622.7 million, or $28.51 per share. Main Street Banks fell 73 cents to $28.
Overseas, Japan’s Nikkei stock average tumbled 1.36 percent. In Europe, Britain’s FTSE 100 was down 0.47 percent, Germany’s DAX index rose 0.17 percent and France’s CAC-40 slipped 0.04 percent.
