US stocks end mixed

Wall Street finished an uncertain session mixed today, encouraged by a drop in oil prices but worried about disappointing earnings from media giant Time Warner.

The Standard & Poor’s 500 index inched upward and reached a four-year high for the fourth time in six sessions.

One day after the S&P 500 and Nasdaq composite index broke through their June 2001 levels, investors appeared willing to wait for better news. With the US Labour Department’s jobs report due Friday and the Federal Reserve’s latest decision on interest rates next Tuesday, investors were considered unlikely to bid stocks much higher in the meantime.

“I think this market is just going to have to grind higher, little by little, and probably sell off a little here and there, at least until the Fed meeting,” said Scott Wren, equity strategist for AG Edwards & Sons.

While Time Warner’s worse-than-expected results pressured stocks, investors were relieved by the drop in oil futures, coming as the US government’s latest petroleum inventory report showed a slight rise in crude stockpiles. After reaching a new intraday record of 62.50 US dollars early in the session, a barrel of light crude settled at US$60.86 (€49.35) on the New York Mercantile Exchange.

The S&P 500 gained 0.92, or 0.07%, to 1,245.04, its best close since June 12, 2001.

Other stock indicators were narrowly mixed. The Dow Jones industrial average rose 13.85, or 0.13%, to 10,697.59, while the Nasdaq composite index lost 1.34, or 0.06%, to 2,216.81.

Bond prices rose as the US Treasury Department announced the return of the 30-year bond, to be issued after a five-year hiatus. The yield on the benchmark 10-year Treasury note fell to 4.30% from 4.34% late yesterday. The dollar fell against most major currencies, while gold prices rose.

Investors were disappointed in the latest reading of the Institute for Supply Management’s services index. The index, which measures growth in the service sector of the economy, fell to 60.5 in July, lower than the 61 reading expected by economists and down from 62.2 in June.

Even as oil prices fell, some analysts worried that the bullish earnings season – more than two-thirds of companies have exceeded Wall Street’s profit forecasts – is masking the effects that high energy prices could have on third- and fourth-quarter earnings.

“This market has reacted to earnings news without thinking about the effects that US$60 a barrel oil could have on the third and fourth quarters and beyond,” said Brian Bruce, director of global investments, PanAgora Asset Management in Boston.

“The good news from companies still continues to create a halo effect around stocks, but if US$60 is the new equilibrium for oil prices, that’ll create a problem down the road.”

Time Warner shares fell after the media conglomerate said it will set aside US$3bn (€2.43bn) to settle lawsuits filed by investors angry over the 2000 merger with AOL.

Declining issues outnumbered advancers by nearly 8 to 7 on the New York Stock Exchange, where volume came to 1.52bn shares, compared with 1.53bn traded on yesterday.

The Russell 2000 index of smaller companies fell 5.13, or 0.75%, to 683.38.