Stocks closed Tuesday narrowly mixed, as strong earnings from Alcoa Inc. led the Dow Jones industrials slightly higher but the Nasdaq composite gave up early gains as rising oil prices renewed worries about inflation and recession.
Solid earnings and outlooks from a handful of companies helped the Dow, which rose after aluminum maker Alcoa’s reported higher profits despite rising energy costs and lower prices for aluminum.
But traders continue to look anxiously for signs that higher energy costs will depress corporate earnings. Rising oil prices stoked that nervousness. A barrel of crude settled at $63.53, up $1.73 on the New York Mercantile Exchange.
The markets’ behavior is typical of an aging bull market — and this bull market, now in its fourth year, is aging, said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co. “Things are just more erratic, they take longer, they’re not as decisive,” he said.
“We have decent economic growth, but the Fed’s tightening,” Blood continued. “Earnings should be good, but rising interest rates are putting a little bit of pressure on valuation — all that nets out to a higher market, but not every day and every week.”
The Dow Jones industrial average finished the day up 14.41 points, or 0.1 percent, having lost 276.36 points, or 2.62 percent, last week, and another 53 points Monday. But the broader Standard & Poor’s 500-stock index fell 2.46 points, or 0.2 percent, while the Nasdaq composite index lost 17.83 points, or 0.9 percent.
Investors got another signal that the Federal Reserve’s tightening of short-term interest rates to stave off inflation would continue. In minutes released from its Sept. 20 closed-door discussions, Fed officials said they felt the need to keep boosting interest rates in September partly out of concern that a pause might mislead people into thinking the Fed was too worried about the economic impact of Hurricane Katrina.
“A pause in policy tightening at this meeting had the potential to mislead the public both about the committee’s perceptions of the fundamental strength and resilience of the economy and about its commitment to fostering price stability,” the minutes stated.
In company news, cancer drug maker Genentech Inc. rose $2.59 to $84.59 after its third-quarter profits soared 56 percent. Revenue rose 46 percent to $1.75 billion from $1.2 billion in the same third quarter last year, mostly on torrid sales of its drug Avastin, which chokes the blood supply that feeds tumors.
NCR Corp. rose $1.29 to $32.24 after it raised its third-quarter and fiscal 2005 earnings outlook. The company, which makes cash registers, ATMs and computer systems, was helped by a one-time gain and said its revenue and cost savings were better than expected.
Alcoa rose 19 cents to $22.85 after it said its profits, released after the close of trading Monday, were 2 percent higher than a year ago, despite surging energy costs and lower aluminum prices. The company saw additional income in the fiscal third quarter after selling some railroad assets and has also been eliminating jobs to offset rising costs.
RealNetworks Inc. rose $1.96 to $7.70 after it settled an antitrust lawsuit against its longtime adversary Microsoft Corp. RealNetworks said it had reached three deals with Microsoft worth $761 million, including a $301 million cash payment and the establishment of music and games partnerships designed to help RealNetworks products reach a wider audience. Microsoft fell 5 cents to $24.41.
(MSNBC is a Microsoft-NBC joint venture.)
The New York Stock Exchange suspended trading in Delphi Corp. stocks and bonds Tuesday, three days after the auto parts maker declared bankruptcy, due to “abnormally low” trading levels of its stock. The Big Board’s move was the result of a review sparked by Delphi’s Chapter 11 filing, announced Saturday. Its stock last traded at 36 cents a share, up 3 cents.
Overseas, Japan’s Nikkei stock average had a stellar day, rising 2.49 percent. Japan’s lower house of parliament approved privatization of the country’s $3 trillion postal system, paving way to create world’s biggest bank. The nation’s postal service also handles insurance and savings deposits.
In Europe, Britain’s FTSE 100 rose 0.12 percent, Germany’s DAX index was up 0.19 percent and France’s CAC-40 gained 0.30 percent.