Concerns about inflation pushed material companies higher Tuesday, the same day that the Federal Reserve released minutes that showed that some officials at the central bank raised concerns that higher energy prices could weaken the economy. Stocks closed narrowly mixed.
The minutes, from its closed door meeting on March 15, confirmed that members of the central bank are split about whether the Fed needs to tighten credit later this year to ward off inflation. All of its members agreed that the economy is currently improving.
Companies that make basic materials rose as traders anticipated more price increases for commodities. Aluminum maker Alcoa Inc. rose 2.5 percent, Newmont Mining Corp. rose 3.8 percent and Dow Chemical Co. rose 1.3 percent.
"I think the market is concerned that (Fed) Chairman (Ben) Bernanke doesn't share the same level of concern regarding inflation that it might wish him to, and that is leading to stronger commodity prices," said Howard Ward, the chief investment officer for GAMCO Investors.
According to preliminary calculations, the Dow Jones industrial average gave up earlier gains closing down 6.13 points at 12,393.90. The S&P 500 index fell 0.24 points, or 0.02 percent, to 1,332.63. The Nasdaq was rose 2 points, or 0.07 percent, to 2,791.19.
Materials companies rose 1.2 percent, the most of the 10 company groups that make up the S&P index. Gold gained 1.4 percent to $1,452.50 an ounce. Silver and copper also rose.
Stocks had edged lower in early trading, following most world markets, after China raised a key lending rate and the rating agency Moody's lowered Portugal's credit rating. A survey from the Institute for Supply Management reported growth at service companies last month but at a slower rate than analysts were expecting.
Technology companies climbed after Texas Instruments Inc. said it planned to buy National Semiconductor for a large premium. National Semiconductor soared 71 percent. Cisco Systems Inc., Intel Corp. and Microsoft Corp, rose the most of the 30 stocks in the Dow Jones industrial average.
After falling more than $10 earlier in the day, Apple Inc. regained most of its losses. Nasdaq OMX Group Inc. announced a rebalancing of the Nasdaq-100 Index next month that will cut Apple's weighting in the index from 20 percent to 12 percent. That will likely force some money managers to reduce their holdings.
KB Home nearly 4 percent. The homebuilder reported a first-quarter loss of $1.49 a share, far more than the 25 cents analysts were expecting.