Stocks were mixed in a volatile session on Wall Street today, with blue chips weighed down by uncertainty over oil prices and a new investigation of the insurance industry.
Tech stocks received a boost from strong earnings by eBay Inc.
The Dow Jones industrials were put under pressure by American International Group, which missed estimates on its latest earnings and announced that it was the subject of a grand jury probe.
And while pharmaceutical stocks were up on positive earnings news, Dow components IBM and Caterpillar were heavily sold off.
Worried investors saw a little relief from oil prices, which remained below the 55 per barrel mark. A barrel of light crude closed at 54.47, up 6 cents, on the New York Mercantile Exchange.
“Considering where oil is and the mixed earnings we’ve had, I think the market’s holding in there valiantly,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “Tech stocks are providing a little leadership, but there’s no follow through. We’ll need a bigger catalyst to break out of this trading range we’re in.”
The Dow Jones industrial average fell 21.17, or 0.2%, to 9,865.76. The index had fallen below the Dow’s lowest close of the year to date, 9,814.59 on August 12, earlier in the session.
Broader stock indicators were substantially higher. The Standard & Poor’s 500 index was up 2.83, or 0.3%, at 1,106.49, and the tech-focused Nasdaq composite index gained 20.65, or 1.1%, to 1,953.62.
The markets were cheered by the Labour Department’s latest report on first-time jobless claims, which fell 25,000 to 329,000 last week, the lowest level since early September.
However, investors were disappointed with the latest reading of the Conference Board’s Index of Leading Economic Indicators fell for a fourth month in a row in September. The index, which measures future economic potential, fell 0.1% for the month – a sign that the US economy continues to lose momentum.
Positive earnings from European drug makers helped minimise blue chip losses in the healthcare sector. AstraZeneca PLC climbed 87 cents to 40.50 after it announced a 19% jump in profits, while Novartis AG gained 53 cents to 47.23 after it beat Wall Street expectations by 5 cents a share.
US pharmaceutical company Schering-Plough swung to a profit in the third quarter, posting earnings of a penny per share, with analysts expecting a loss of a penny per share. Schering-Plough gained 26 cents to 16.98. Eli Lilly beat estimates by a penny per share, but lowered its outlook and announced additional job cuts. Lilly was down 2.46 at 52.64.
“I think people are looking more at forecasts and outlooks than at earnings,” said David Legeay, senior vice president at McDonald Financial Group. “When you look at the economy going forward, you really want to see strong guidance for the fourth quarter and next year, and we’re not getting it.”
Struggling Merck, a Dow component, slipped 14 cents to 31.26 after it missed Wall Street forecasts by 11 cents per share due to charges related to the withdrawal of its arthritis drug Vioxx from the market.
The Dow was also held back by AIG’s announcement that it is the target of a federal grand jury investigation in Indiana over its corporate insurance products. The insurance giant also missed its third-quarter earnings expectations by a penny per share. AIG slid 1.15 to 56.45.
And despite positive earnings this week, both IBM and Caterpillar fell sharply. IBM lost 72 cents to 88.10, while Caterpillar tumbled 3.35 to 77.03 on a lower outlook for future earnings.
Tech stocks received a boost from eBay’s upbeat earnings, announced after trading on Wednesday. The online auctioneer beat Wall Street expectations by a penny per share as both revenue and profits soared from a year ago. eBay surged 8.23 to 99.59.
AT&T rose 22 cents to 15.80 after it said it lost 7.12 billion in the third quarter, blaming charges related to the company’s withdrawal from the traditional landline telephone market.
Advancing issues outnumbered decliners by nearly 2 to 1 on the New York Stock Exchange, where volume totalled 1.67 billion shares, compared to 1.69 billion on Wednesday.
The Russell 2000 index of smaller companies was up 6.53, or 1.2%, at 576.66.