Wall Street closed Thursday mixed, as Iran’s refusal to suspend uranium enrichment rattled investors, stemming a tech-sector rally spurred by a strong outlook from chip maker Analog Devices Inc.
Investors were uneasy after a U.N. nuclear chief said Iran did not agree to Security Council demands to suspend its nuclear ambitions. Also hurting stocks was a U.S. government report that showed a larger-than-expected drop in gasoline and heating oil inventories, causing oil prices to bound above $60 a barrel.
This chilled the mood among investors who at first were encouraged by upbeat corporate announcements and a rally in foreign stock markets. Strength among semiconductor stocks initially helped drive the Nasdaq composite index to six-year highs.
Analog Devices Inc., which gave an optimistic outlook about improving business conditions, lent support to chip stocks. Investors were also encouraged about takeover activity so far this year as Whole Foods Market Inc. said it will buy rival Wild Oats Markets Inc. in a $565 million deal.
“With the lack of real market-moving news traders are taking a look at the Iran thing and the technical breakdowns and we’re seeing a little bit of a pause on that,” said Jody Giraldo, vice president of equities at vFinance.
The Dow Jones industrial average closed the day off 52 points, or 0.4 percent, while the broader Standard & Poor’s 500-stock index was down one point, or 0.1 percent, but the Nasdaq Composite index managed a small gain, adding 7 points, or 0.3 percent.
Overseas, Japan’s Nikkei stock average closed up 1.09 percent, making its first foray above 18,000 in nearly seven years. At the close, Britain’s FTSE 100 was up 0.37 percent, Germany’s DAX index was up 0.46 percent, and France’s CAC-40 was up 0.23 percent.
The aftermath of Wednesday’s stronger-than-expected consumer inflation figures from the government sent bond yields higher for the second day. The yield on the benchmark 10-year Treasury note rose to 4.74 percent from 4.70 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.
Oil rose in an erratic session after the Energy Department reported increased demand for crude-based products. The price of a barrel of light sweet crude rose to a 7-week high on the New York Mercantile Exchange.
The market had little reaction to a Labor Department report that said fewer Americans applied for unemployment benefits last week after filings jumped in the prior week by the most since 2005. Jobless claims fell to 332,000.
Ryan Larson, senior equity trader at Voyageur Asset Management, a division of RBC Dain Rauscher, said the markets initially pulled back after word of the diplomatic tensions with Iran — then dropped further as stocks hit technical resistance levels. Traders believe those levels are 12,760 for the Dow and 2,530 for the Nasdaq.
“I don’t think the market was putting much significance into the fact that Iran would suspend because you’re not seeing a lot of safe-haven buying like Treasuries,” he said. “I think the main story that is starting to unfold is more of a technical aspect to today as we’ve seen investors digest pretty much most of the news out this morning.”
He added that technology stocks were providing some lift to the markets.
Apple Inc. rose 7 cents to $89.27 after a deal with Cisco Systems Inc. will allow it to use the iPhone name when it rolls out the new mobile telephone that is combined with a music player. Cisco dropped 2 cents to $27.36.
Analog Devices said there are improving trends in some of its business segments. Shares surged $3.27, or 9.8 percent, to $36.59.
Google Inc. made a direct challenge to Microsoft Inc.’s Office brand of business computer programs, unveiling its own suite of Web-based products for word processing, e-mail, spread sheets and other programs.
Google fell 13 cents to $475.73, while Microsoft shed 9 cents to $29.26.
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Whole Foods jumped $5.96, or 13 percent, to $51.66 after it backed its forecast for same-store sales growth between 6 percent and 8 percent. The company, which also unveiled its acquisition of Wild Oats, received a number of analyst upgrades before the opening bell.
Wild Oats shares rose $2.71, or 17 percent, to $18.43.
Toll Brothers Inc., the largest U.S. luxury-home builder, reported fiscal first-quarter profit tumbled 67 percent on expenses to write down the value of land. Shares fell $1.17, or 4 percent, to $31.69.
This cast a shadow over other home builders. Pulte Homes Inc. fell 67 cents, or 2.1 percent, to $31.27; KB Home tumbled $1.60, or 3 percent, to $52.13.
Department stores were also under pressure after J.C. Penney Co. said fourth-quarter profit sank 13 percent. Shares fell $2.70, or 3.1 percent, to $83.65.
Federated Department Stores Inc. rose 8 cents to $44.06, Kohl’s Corp. dropped 80 cents to $72.84, Dillard’s Inc. slipped 56 cents to $34.98 and Nordstrom Inc. rose 15 cents to $59.32.