Wall Street rose Wednesday on some strong earnings and new deals, but not without a struggle, as mounting signs of a tougher lending climate continued to dog investors.
The stock market, coming off Tuesday’s 226-point tumble in the Dow Jones industrial average, seesawed throughout Wednesday’s session. Ultimately, it drew confidence from better-than-expected quarterly profits at Web retailer Amazon.com Inc. and plane manufacturer Boeing Co., and acquisitions involving German engineering company Siemens AG and drug maker Merck & Co.
Still, some investors worry that deteriorating lending conditions will cork this year’s heavy stream of dealmaking. Buyouts usually involve taking on debt, and Wednesday, the banks raising funds for the turnaround of Chrysler Group had to postpone a $12 billion debt offer after investors balked at the deal’s terms, according to people familiar with the situation who were not authorized to speak publicly.
Meanwhile, the National Association of Realtors on Wednesday confirmed that the housing market is far from recovery when it reported that sales of existing homes dropped 3.8 percent in June to the slowest rate in more than 4 years. The figure was worse than analysts expected, and followed data from the Mortgage Bankers Association showing mortgage applications fell for the first time in four weeks to a five-month low.
Wall Street, now at the peak of second-quarter earnings season, has been incredibly volatile lately. For seven straight sessions, the market has risen one day, fallen the next, then risen again. Over that span, the Dow has lost 165.91 points, or 1.2 percent.
The market will likely remain rocky as investors try to assess whether problems related to home lending will hurt the broader economy.
“It’s an open-ended unknown, and that’s the problem,” said Richard E. Cripps, chief market strategist for St. Louis-based broker Stifel Nicolaus.
According to preliminary calculations, the Dow Jones industrial average rose 68.12, or 0.50 percent, to 13,785.07, after trading up more than 100 points and down more than 40.
Broader stock indicators also rose in shaky trading. The Standard & Poor’s 500 index climbed 7.05, or 0.47 percent, to 1,518.09, and the Nasdaq composite index advanced 8.31, or 0.31 percent, to 2,648.17.
Despite the gains in the major indexes, declining issues outnumbered advancers by about 10 to 7 on the New York Stock Exchange, where volume came to 2.03 billion shares.
Treasury bonds rose after the weak housing data prompted investors to buy safe government assets. As bond prices rose, the benchmark 10-year Treasury note’s yield decreased to 4.91 percent from 4.95 percent late Tuesday.
Falling home prices have made it harder for some homeowners to refinance their homes, leading to more payment defaults and delinquencies. Home prices are likely to keep weakening, with values still unjustifiably high in many parts of the country, said Rob Lutts, chief investment officer at Cabot Money Management.
“Does that mean that the stock market becomes totally unhinged? I don’t think so. This is one factor,” Lutts said. Still, he said, the housing market downturn could easily cause a 5 percent to 10 percent correction on Wall Street.
The dollar rose against other major currencies, while gold prices fell.
Light, sweet crude for September delivery shot up $2.32 to $75.88 a barrel on the New York Mercantile Exchange, bouncing back from two straight days of steep declines after the U.S. government Wednesday said crude oil supplies fell last week.
Despite concerns about waning demand for debt, the acquisitions keep coming.
“Corporate balance sheets are very healthy. They’re the healthiest they’ve been in 15, 20 years. I don’t see that changing,” Lutts said.
Siemens AG, which posted a 54 percent rise in quarterly earnings, said it will sell its VDO auto parts unit to Germany’s Continental AG in a $15.67 billion deal and buy diagnostics company Dade Behring Inc. for $7 billion.
Dade Behring jumped $18.17, or 32.5 percent, to $74.08, and Siemens’ U.S. shares fell $7.86, or 5.4 percent, to $136.70.
Meanwhile, Merck agreed to buy NovaCardia Inc., a clinical-stage pharmaceutical company with a promising heart disease drug, for $350 million, and said it will update its 2007 earnings forecast when the deal closes.
Merck, one of the 30 Dow companies, advanced $1.66, or 3.2 percent, to $53.38.
Though a few major companies’ second-quarter earnings have disappointed investors over the past couple weeks, they got some good earnings news Wednesday.
Boeing, the biggest gainer in the Dow, rose $3.43, or 3.3 percent, to $107.23, after posting a $1.1 billion profit in the second quarter, up from a year-ago loss, and hiking its profit forecast.
Amazon.com surged $16.93, or 24.5 percent, to $86.18, after the Web retailer said its second-quarter profit more than tripled on strong sales of books, music and electronics worldwide.
The Russell 2000 index of smaller companies rose 0.64, or 0.08 percent, to 812.50.
Overseas, Japan’s Nikkei stock average fell 0.80 percent. Britain’s FTSE 100 slid 0.68 percent, Germany’s DAX index lost 1.46 percent, and France’s CAC-40 declined 1.19 percent.