The Dow industrials and Nasdaq finish lower, S&P higher. Wednesday ends with small losses.
March 31, 2004: 4:06 PM EST
NEW YORK (CNN/Money) - The Dow industrials and the Nasdaq composite ended a tumultuous session Wednesday much as they ended the first quarter -- with modest declines.
Weaker-than-expected economic news and worries about Friday's monthly employment report and the continued rise in oil prices all impacted the session, as well.
According to preliminary reports, the Dow Jones industrial average (down 24.00 to 10357.70, Charts) lost 0.25 percent Wednesday, the Standard & Poor's 500 (down 0.79 to 1126.21, Charts) index lost 0.1 percent, and the Nasdaq composite (down 6.41 to 1994.22, Charts) lost 0.4 percent. All three had been weaker for most of the session, before attempting to rally and then falling back.
The major indexes rallied Monday and ultimately ended a tough session higher Tuesday, near the end of what has been a challenging quarter. Positive corporate news and optimism about Friday's monthly payrolls tally likely spurred the gains, analysts said, in conjunction with a bounce after several weeks of selling.
Wednesday, the last day of the quarter, was less clear cut, as investors retreated from two sessions of gains and mulled the continued surge in oil prices and Friday's jobs report.
According to early tallies, the Nasdaq ended the quarter down by about 0.5 percent, the Dow lost about 1 percent, while the S&P 500 was the lone gainer, up around 2 percent.
Here's what was impacting trade near the close.
Jobs and the economic recovery
Early session weakness was exacerbated by the session's duo of weaker-than-forecast manufacturing sector reports. But those declines eased up in late afternoon trade, with the major indexes, in particular the Nasdaq, trying to again break through key psychological levels.
"Part of what's been driving prices is window dressing on the part of portfolio managers at the end of the quarter," said John Hughes, a market analyst at Shields & Co.
"But the volume's been low and that tells you there's no enthusiasm," Hughes added. "People may be expecting that the payrolls number Friday will be good, but they are not willing to bet on it too much yet, so you're seeing this tentative trade."
Thursday will the national manufacturing report from the Institute for Supply Management, but the week's biggest news on the economy will come with Friday's March labor market report.
The unemployment rate is expected to hold steady at 5.6 percent, according to economists surveyed by Briefing.com. But employers are expected to have added 123,000 jobs to payrolls, according to the forecasts, after adding a surprisingly low 21,000 last month.
A return to hiring would be welcomed by investors who feel that the lagging labor market is the last factor in an economic recovery. However, the other side of the argument says that if hiring is starting to truly pick up, coupled with businesses reporting strong earnings -- as they are expected to do in the first quarter and beyond -- that might put pressure on the Federal Reserve to raise interest rates sooner than some investors might like.
This tug of war, and the continued aftermath of the 2003 and early 2004 stock rally has left Wall Street in a bit of a funk during the first three months of 2004.
Market movers
In corporate news, shares of computer data storage maker QLogic (QLGC: down $9.69 to $33.00, Research, Estimates) fell 21 percent in active Nasdaq trade after the company warned that fiscal fourth-quarter results would miss estimates due to a dip in expected orders for computer networking gear.
Other data storage stocks fell too, including Emulex (ELX: down $1.48 to $21.29, Research, Estimates) and Brocade Communications (BRCD: down $0.45 to $6.64, Research, Estimates), both down more than 5 percent.
Electronics retailers Best Buy (BBY: up $3.32 to $51.72, Research, Estimates) and Circuit City (CC: up $0.60 to $11.30, Research, Estimates) both reported higher-than-expected earnings.
Best Buy's stock added 7 percent after the company reported a profit of $1.42 per share, 3 cents higher than what analysts were expecting and up from $1.16 per share a year earlier. The company also raised its current quarter and full-year forecasts, due to strong sales.
Circuit City gained 5.5 percent after it said it earned 46 cents per share, 10 cents more than what analysts surveyed by First Call were expecting and more than a year earlier. The company also said that it is buying smaller rival InterTan (ITN: up $1.72 to $13.97, Research, Estimates) for $284 million in cash. InterTan rallied close to 14 percent.
Market breadth turned positive. On the New York Stock Exchange, where 1.05 billion shares traded, gainers beat winners by more than three to two. On the Nasdaq, where 1.42 billion shares traded, advancers edged decliners by eight to seven.
Released in the early morning, the Chicago Purchasing Managers Index, a reading on manufacturing in the Midwest, dropped to 57.6 this month from 63.6 in February. The index was expected to recede to 61.0 in March, according to Briefing.com. Any reading above 50 indicates that the manufacturing sector is expanding.
Separately, factory orders rose a meager 0.3 percent in February, against expectations for a gain of 1.5 percent after a 0.5 percent decline in January.
Traders also kept a keen eye on oil prices. Despite requests to the contrary, OPEC said it will go ahead and support crude output cuts, starting Thursday. In commodities trading, NYMEX light sweet crude oil futures fell 55 cents to $35.70 per barrel, pulling back from a bigger drop earlier. COMEX gold rallied $5.50 to settle at $428.30 per ounce.
The dollar remained sharply lower versus other major currencies, failing to recover from damage done early in the day by a rumor that Federal Reserve Chairman Alan Greenspan had suffered a heart attack, which the Fed quickly denied.
Treasury prices gained following the release of the economic reports. The 10-year note climbed almost 1/2 of a point, its yield moving down to 3.84 percent from 3.89 percent late Tuesday.
In international trade, markets gained modestly in Asia. In Europe, stocks closed mixed.
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