updated 4/7/2005 9:27:38 AM ET 2005-04-07T13:27:38

Stocks wobbled to a mixed close Wednesday, as a government report showed an improved supply outlook for oil, and the first day of earnings season forced investors to shift their focus to company news.

Major Market Indices

Investors were in the early stages of trying to assess what the upcoming profit results might reveal about the economy’s momentum. Wall Street is likely to pay particular attention to the reports from industrials and financial companies as it eyes the impact rising interest rates have had over the course of 2005’s first quarter.

During this period, it’s likely “the market is not going to move dramatically one way or the other,” said Jeff Kleintop, chief investment strategist for PNC Financial Services Group in Philadelphia, noting that stocks tend to do better in the actual reporting season than during pre-announcements.

“It’s been a show-me-the-money kind of market, very reactive, waiting to see the results,” Kleintop said. “Usually it’s buy on the rumor, sell on the news, but lately the market’s been saying ’I’ll buy on the news, thank you very much!”’

The Dow Jones industrials were up 27.56 points, or 0.3 percent, at Wednesday’s close, marking the index’s third straight day of gains. The broader Standard & Poor’s 500-stock index finished higher by 2.68 points, or 0.2 percent, but the tech-rich Nasdaq composite index fell a fraction of a point.

While the quality of corporate profits is likely to emerge as the main driver in the weeks ahead, Wall Street is also watching oil prices. A decline in crude coupled with a firmer dollar could help stocks break out of the low end of their current trading range, said Subodh Kumar, chief investment strategist with CIBC World Markets.

“There are two kinds of risks right now. One is oil prices going ever higher, the second is the U.S. dollar going ever lower,” Kumar said. “So you have to look at both of these things. A firmer dollar is better for capital market risk, and oil prices pulling back may reduce some fears about earnings and consumer spending.”

Financial stocks were among the day’s best gainers as Treasuries continued their rally; the yield on the benchmark 10-year note fell to 4.43 percent from 4.47 percent late Tuesday. The U.S. dollar was mixed against other major currencies. Gold prices rose.

Oil futures settled 19 cents lower at $55.85 on the New York Mercantile Exchange, following the government’s weekly fuel supply report, which showed a 2.4 million barrel build in crude. There was also a 2.1 million barrel draw in gas inventories, however, which could cause some concern ahead of the summer driving season.

In Washington, Federal Reserve Chairman Alan Greenspan urged Congress to limit the size of the multibillion-dollar portfolios held by mortgage giants Fannie Mae and Freddie Mac, warning that stronger regulations alone would not sufficiently reduce the risk they pose to the U.S. financial system. Restraining their growth is essential, he warned, because if one or both of the institutions fail, the federal government would have to bail out investors.

Debate over how to regulate Fannie and Freddie intensified following accounting scandals at both companies, and legislation to tighten government oversight was introduced late Tuesday. Fannie Mae, the leading U.S. buyer of home mortgages, closed up $1.87 at $54.15; its rival, Freddie Mac, the second-largest mortgage buyer, added $2.04 to $63.80 following Greenspan’s remarks, and as Wall Street digested the proposed legislation, which some found less onerous than feared.

Heralding the start of earnings season, Dow component Alcoa Inc. reported results after the market closed; the aluminum producer said first-quarter profits fell year-over-year due to restructuring charges and other items, but operating profit was in range of expectations. Alcoa, which closed unchanged at $29.98 a share, gained 2.9 percent in after-market trading.

Anheuser-Busch Cos., the nation’s biggest brewer, slid 3.8 percent, or $1.79, to $45.65, after lowering its profit forecast for the year and saying it would step up its marketing efforts following weaker-than-expected U.S. sales. Legg Mason downgraded the producer of top-selling Budweiser and Bud Light to a “sell,” saying its shares were likely to trade in the low-$40s in the months ahead.

Wendy’s International Inc. shed 39 cents to $38.86 after projecting a smaller first-quarter profit, saying its earnings will be slammed by higher beef prices, expensing stock options and an earlier Easter holiday this year. But the fast-food chain maintained expectations for a rebound in the second half of 2005 and reiterated its projected full-year earnings.

Monsanto Co. gained 77 cents to $61.75 after saying second-quarter profits more than doubled year-over-year, surpassing Wall Street estimates. The maker of Roundup herbicide and genetically modified seeds also raised its outlook for the year.

Siebel Systems Inc. slumped 89 cents to $8.26 after warning of a first-quarter loss late Tuesday; several brokerage firms downgraded the company.

Research In Motion Ltd., the maker of the popular BlackBerry wireless device, declined $1.48 to $72.92 after saying that fourth-quarter sales came in below Wall Street expectations despite subscriber growth that more than doubled from a year ago.

Overseas, Japan’s Nikkei average added 0.5 percent. In Europe, France’s CAC-40 rose 0.5 percent, Britain’s FTSE 100 gained 0.1 percent and Germany’s DAX was up 0.4 percent.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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