Wall Street wobbled to a narrowly mixed finish Wednesday, as dramatically lower crude oil prices offset a government report that offered new evidence of rising inflation.
The Labor Department’s reading of its Consumer Price Index showed a higher-than-expected 0.4 percent rise for February, adding to inflation concerns raised by Federal Reserve policy-makers on Tuesday. It was the last thing investors wanted to see, but the sharp drop in oil and the fact that much of the market’s inflation fear had been priced into stocks during the previous session kept stocks from posting precipitous declines, analysts said.
“Probably the most important factor today is energy,” said Arthur Hogan, chief market analyst at Jefferies & Co. “If we had this move in the commodity in a vacuum, I think we would have a market that was up a couple hundred points. The CPI is keeping that from happening, but the good news is we’re not selling off. If we’re gonna flip-flop, I’d rather see us flip-flop to the upside.”
The Dow Jones industrial average was down 14.49 points, or 0.1 percent, at the close of trading, having edged in and out of negative range for most of the trading session. The Dow fell 94.88 Tuesday amid growing inflation concerns.
The broader Standard & Poor’s 500-stock index was up 0.82 point, or 0.1 percent, while the Nasdaq composite index added 0.88 point, or 0.04 percent, helped by semiconductor stocks.
Oil dropped $2.22 to $53.81 per barrel on the New York Mercantile Exchange, as a weekly government report showed a larger than expected build in crude supplies. Gold dropped more than $6 to $425.20, and the U.S. dollar rose sharply against other major currencies following the Fed’s decision Tuesday to raise short-term interest rates by another quarter-point to 2.75 percent. Bonds were mixed, with the yield on the 10-year Treasury declining to 4.60 percent, from 4.63 percent late Tuesday.
The increase in the consumer price index, the government’s most closely watched inflation barometer, came after prices edged up by just 0.1 percent in January. Economists had forecast a 0.3 percent rise. Although sharp increases in energy costs — including gasoline — led the way in February, many other prices, including airfares, medical care, and for education, also went up. The “core” CPI, which excludes energy and food, rose 0.3 percent, its largest increase since September.
“I think the Fed got a chance to review the CPI numbers yesterday, so I think that was baked into their actions already,” said Jack A. Ablin, chief investment officer at Harris Private Bank. “Still, this is the worst [CPI] report we’ve seen for six months. Core is up 2.4 percent year-over-year, and it’s ratcheting higher and creating concern.”
General Motors Corp. declined 88 cents to $28.66 on a report it is in talks with private equity firms about selling part of its GMAC Commercial Mortgage unit. The deal could raise as much as $1 billion for the world’s largest automaker, The Wall Street Journal reported Wednesday, citing people close to the matter. Talks of a sale come as GM tries to avert a possible credit downgrade resulting from its slumping North American business.
Business software maker Oracle Corp. was up 2 cents at $12.51 after its quarterly earnings dropped 15 percent because of the financial fallout from its $10.6 billion acquisition of PeopleSoft Inc. Excluding the complex accounting for the PeopleSoft takeover, however, Oracle’s earnings were a penny above analyst estimates.
MCI Inc. was up 30 cents at $23.27 on a Journal report that its board plans to discuss the latest buyout offer from Qwest Communications International Inc. The long-distance phone company has been under pressure to consider a Qwest bid after agreeing to smaller offer from Verizon Communications Inc. Qwest gained 3 cents to $3.80 on the news; Verizon added 45 cents at $34.91.
Overseas, Japan’s Nikkei average declined 0.9 percent. In Europe, France’s CAC-40 shed 0.4 percent, Britain’s FTSE 100 fell 0.5 percent and Germany’s DAX index lost 0.1 percent.
