Stocks finished mixed in another volatile session today after a spike in wholesale prices touched off inflation concerns and partially overshadowed a strong increase in retail sales last month.
Despite the uneven economic news, a strong forecast by Honeywell International propped up the Dow Jones industrial average.
Wall Street, which has this week paid close attention to steps by the Federal Reserve to stoke greater movement in moribund credit markets, again looked to fresh economic data for signals about the health of the economy.
In one unwelcome development, prices at the wholesale level jumped 3.2% in November – their biggest increase in 34 years – after a steep rise in wholesale gasoline prices. The news was not all bad, however. The Commerce Department said retail sales rose in November by the largest amount in six months, and a Labour Department report showed a drop in new claims filed by those seeking jobless benefits.
The modest movement on Wall Street came a day after stocks rose, but finished well off their highs, as investors examined the Fed’s agreement with the European Central Bank and the central banks of England, Canada and Switzerland to combat what it described as elevated pressures in the credit markets.
Scott Fullman, director of investment strategy for IA Englander & Co, said investors struggled with the day’s economic readings as well as the Fed’s actions.
“It’s definitely a mixed picture. People are still digesting what came from the Fed. You put this all together and it gives you a healthy dose of volatility,” he said. “I really don’t think anybody is saying ’I’m very confident to get into this market’.”
The Dow Jones industrial average rose 44.06, or 0.33%, to 13,517.96, after being down more than 100 points earlier.
Broader stock indicators were mixed. The Standard & Poor’s 500 index edged up 1.82, or 0.12%, to 1,488.41, while the Nasdaq composite index declined 2.65, or 0.10%, to 2,668.49.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange, where volume came to 1.29 billion shares.
Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 4.19% from 4.06% late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Light, sweet crude for January delivery fell 2.14 dollars to settle at 92.25 dollars a barrel on the New York Mercantile Exchange.
The mixed economic readings came in a week already made busy by the Fed’s decision on Tuesday to lower interest rates for the third time this year and its announcement a day later of the liquidity plan. Investors since have been debating the effectiveness of the measures.
A slowdown in the housing market remains a concern for Wall Street, as do spiking mortgage defaults that have made banks hesitant to lend to one another amid uncertainty about who might be holding bad debt. The Fed’s actions are aimed at easing the logjam.
The producer price index, which measures inflation at the wholesale level, rose 3.2% in November, according to the Labour Department. But excluding the often volatile food and energy sectors, inflation rose by 0.4%. While the Fed generally looks at inflation figures excluding food and energy costs, a sharp rise in overall inflation could make it harder for the central bank to continue cutting interest rates.
And retail sales jumped 1.2% in November, double the increase economists had expected. In October, the increase had been a much weaker 0.2%.
In corporate news, Honeywell gained after forecasting 16% to 21% growth in earnings per share for 2008. Analysts polled by Thomson Financial had been expecting 17% growth. Honeywell, one of the 30 stocks that comprise the Dow industrials, rose 3.91 dollars, or 5%, to 60.65 dollars.
JetBlue Airways jumped 90 cents, or 14.4% to 7.15 dollars after German airline Deutsche Lufthansa AG said it plans to pay 300 million dollars for a 19% stake in JetBlue.
Dow Chemical rose 2.64 dollars, or 6.3%, to 44.32 dollars after agreeing to sell a 50% stake in five of its global businesses to a Kuwaiti company for about 9.5 billion dollars to form a joint petrochemicals venture.
The Russell 2000 index of smaller companies fell 2.25, or 0.29%, to 769.46.