Stocks struggle amid earnings news

/ Source: The Associated Press

Stocks closed Wednesday slightly lower, with the Dow Jones industrial average retreating from a record high, as Asian markets recovered from a sell-off and investors sifted through a barrage of corporate profit reports.

Investors breathed a bit easier Wednesday after Asian markets staged a recovery overnight, soothing concerns the region was in jeopardy of slipping into an economic crisis. The Thai government on Tuesday backed off a plan to impose capital controls on foreign investors.

Investors also viewed profit reports from FedEx Corp. and CarMax Inc. as proxies for the economy’s health.

The pull-back came one day after investors overcame lackluster figures on inflation to send the Dow Jones industrial average to its 21st record close since the start of October.

“We view this as an interesting market — one that is clearly liquidity driven versus fundamentally driven,” said David Iben, chief investment officer of Tradewinds, an affiliate of Nuveen Investments.

The Dow Jones industrial average closed the seesaw session off 7.45 points, or 0.06 percent, having hit a new intra-day high earlier in the day. The broader Standard & Poor’s 500-stock index slipped 2.02 points, or 0.14 percent, while the Nasdaq composite index, full of technology stocks, gave up 1.94 points, or 0.08 percent.

Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.60 percent from 4.59 percent late Tuesday. The dollar was mixed against other major currencies, while the price of gold fell.

FedEx fell $2.15, or 1.9 percent, after its fiscal third-quarter forecast came in below Wall Street’s expectation. The shipping company reported a 9 percent increase in its second-quarter profit amid strong results from its ground delivery business.

Used car dealer CarMax rose $4.14, or 8.5 percent, after its third-quarter earnings nearly doubled on strong sales to the wholesale market and increased demand for trucks and sport utility vehicles.

Sally Beauty Holdings Inc. fell $1.21, or 13.1 percent after the beauty supplies company said it lost certain exclusive distribution rights for L’Oreal products.

Real-estate investment trust Taubman Centers Inc. predicted its 2006 funds from operations, a closely watched metric in the real estate industry, will top Wall Street’s forecasts. Taubman rose $1.06, or 2.2 percent.

Biotech drug developer Kosan Biosciences Inc. rose 52 cents, or 10.1 percent after striking an agreement in which Pfizer Inc. will help develop a compound to treat gastrointestinal diseases.

Redback Networks Inc., a maker of routers for broadband networks, jumped $4.49, or 21.2 percent after LM Ericsson agreed to acquire the company for $2.1 billion.

Panacos Pharmaceuticals Inc. fell $1.75, or 30.8 percent and hit a new 52-week low after a mid-stage study of its HIV treatment candidate failed to meet expectations.

Also making news on Wall Street, New York Stock Exchange shareholders on Wednesday overwhelmingly voted for a proposed $14.3 billion acquisition of Paris-based Euronext that would form the first trans-Atlantic financial market. NYSE shares fell $1.17, or 1.1 percent.

Overseas, Japan’s Nikkei stock average closed up 1.40 percent. In Europe, Britain’s FTSE 100 was down 0.09 percent, Germany’s DAX index rose 0.51 percent and France’s CAC-40 was up 0.54 percent.