A late-day buying rush rescued Wall Street from a losing session Wednesday, overcoming record-high oil prices and disappointing economic news that had kept the major indexes in negative range for most of the session. Blue chip stocks closed higher, but tech stocks still lagged.
The final hour advance came after oil futures topped $43 a barrel, a 21-year high, raising inflation worries among investors already nervous about slower growth in the second half of the year. Some analysts doubted the rally’s conviction, however, attributing it to programmed trading — when large investment houses automatically purchase shares because they’ve reached a pre-set buying point — and simple bargain hunting after four weeks of selling.
“The valuations on the Standard & Poor’s 500 are at a level we haven’t seen since 1995, which is pretty impressive if you’re out there shopping for stocks,” said Thomas F. Lydon Jr., president of Global Trends Investments in Newport Beach, Calif. “However, the average investor doesn’t have the confidence to do real buying in this market. It was nice to see the reversal ... but the fundamentals still tend to be on the negative side.”
At the close the Dow Jones industrial average was up 31.93 points, or 0.3 percent, at 10,117.07, making a dramatic recovery from a low of 9,994.22 earlier in the day.
Broader stock gauges also came back from their session lows, but were mixed at the close. The Nasdaq composite index was down 10.84 points, or 0.6 percent, at 1,858.26, largely on weakness among semiconductors. The Standard & Poor’s 500-stock index finished up 0.59 point, essentially flat at 1,095.42.
The Commerce Department reported orders to U.S. factories for big-ticket items rose 0.7 percent in June, slightly lower than what analysts had forecast. The gain in orders for durable goods — items expected to last three or more years — was good news after two months of declines, as it offered some hope that the rebound in the nation’s manufacturing sector is no longer in danger of stalling.
But investors were unimpressed, as the lower-than-expected number comes after a several other business barometers showed weakness for June. Most analysts agree the slowdown is temporary, but trading has been lackluster through the current earnings season due to a number of downbeat outlooks.
Adding to investors concern, September crude oil futures on the New York Mercantile Exchange closed up $1.06 at $42.90 a barrel, as Russian oil giant Yukos warned it might have to shut down production pending the enforcement of a Moscow judge’s order, raising concerns about global and domestic supply. Oil prices were lower in after-hours trading.
While the oil situation didn’t help the market, analysts said the day’s mostly downward trend — which followed a sharply positive session Tuesday — simply extended a months-old pattern, in which poor performance in the tech sector led the rest of the market lower. Much of the anxiety has been focused on semiconductors; because chips are used in virtually all tech products, any weakness in that industry is seen as bad news for the rest of the sector. The Philadelphia Semiconductor Index closed down 0.9 percent, recovering from the day’s low.
“In general, the view on street is that things are slowing down, and no one is confident about the forecasts of the semis,” said Steven Goldman, chief market strategist with Weeden & Co. in Greenwich, Conn. “It’s continuing to move lower, it hasn’t stabilized, and the market’s at the point where it’s not going to shrug it off any further.”
Among the day’s best advancers, Boeing Co. gained 79 cents to $49.01 after reporting better-than-expected profits and raising its forecasts for the rest of this year and next, thanks in part to an improving outlook for the long-stagnant commercial airplane business. The nation’s largest aerospace company said it expects to deliver more jets than previously forecast in 2005.
Time Warner Inc. was down 26 cents at $16.65 after reporting profits that were ahead of expectations, and a boost in revenues thanks to the latest Harry Potter movie and its cable services and networks. The media conglomerate, which operates CNN, Warner Bros. and HBO, lost more customers from its long-troubled America Online division, but advertising buoyed revenues and profits there as well.
On the Nasdaq exchange, shares of cable operator Comcast Corp. fell $1.18 to $27.56. Although the company beat analyst estimates by 2 cents a share, it disappointed investors by scaling back an earlier forecast that it would add 10,000 subscribers in 2004.
Declining issues outnumbered advancers by a wide margin for most of the day, but had only a slight edge on the New York Stock Exchange by the end of the session. Volume came to 1.54 billion shares, compared to 1.6 billion traded Tuesday. The Russell 2000 index, which tracks smaller company stocks, fell 3.41 points, or 0.6 percent, to 541.20.
Overseas, Japan’s Nikkei stock average finished 1.6 percent higher Wednesday. In Europe, France’s CAC-40 added 0.3, Britain’s FTSE 100 rose 0.7 percent and Germany’s DAX index declined 0.2 percent.
