Stocks, which started Tuesday’s session with solid gains, turned mixed as oil
futures prices rose to record high, gold futures spurted to 28-year highs, and the dollar fell to a record low against the euro. Financial stocks were mostly lower despite an early rally attempt as experts forecast long recovery period from derivatives problems.
On Tuesday, the Dow Jones industrial average was lower by 0.57 point at 13,542.83. The broader S&P 500 index rose 0.97 point, or 0.07%, to 1,503.14. The tech-heavy Nasdaq composite index dropped 8.32 points, or 0.30%, to 2,786.86.
Action in the broader market was modestly negative in sluggish trading, with 16 stocks falling in price for every 13 that posted gains on the NYSE. Nasdaq breadth was 16-10 negative.
Another negative for stocks, according to economic research outfit Action Economics: Rumors of another impending large Wall Street write-down. Action reports that following rumors that Goldman Sachs (GS) would announce losses Monday (quickly denied by the firm), fresh talk of an $11 billion writedown by Goldman was making the rounds again on Tuesday. “The market will now be on the lookout for another denial”, says Action.
With little economic news Tuesday, investors were digesting more profit reports as the third quarter earnings season -- the most disappointing in years -- winds to a close. Tuesday's results showed strength from technology, energy and agriculture stocks but more weakness from the mortgage and housing sectors.
Federal Reserve chairman Ben Bernanke is speaking in Texas Tuesday afternoon on the topic of microfinance, but he's not expected to mention the key topic of interest rates.
A measure of U.S. retail spending, the ICSC UBS chain store sales index, climbed 1% last week, after a 0.1% increase the week before. "That's the best performance in three weeks, and comes despite still higher gas prices and warm weather," Action Economics says.
Oil prices were back up near record highs Tuesday. December NYMEX crude futures were trading $2.75 higher at $96.73 per barrel. Comex December gold futures rose to $825.10 per ounce Tuesday.
Among stocks in the news Tuesday, Sun Microsystems (JAVA) was upgraded by analysts at Citigroup from sell to buy after it reported first quarter earnings. Sun posted earnings of 3 cents per share, vs. a 2 cent loss a year ago. Revenue rose slightly and gross profit margins improved.
Valero Energy (VLO) saw profits fall 20%, to $2.09 per share, vs. $2.55 a year ago, while revenue rose 2%. But results seemed to beat analysts' estimates handily, and the stock was higher in pre-market trading.
Archer Daniels Midland (ADM) was expected to move higher after reporting earnings of 68 cents per share, vs. 61 cents a year ago. Sales at the ethanol producer rose 35% as a decline in corn-processing profit was offset by profits from oilseed processing.
IndyMac Bancorp (IMB) shares were expected to fall after the mortgage lender posted a loss of $2.77 per share, vs. earnings of $1.19 a year ago.
Beazer Homes USA (BZH) plans to take a $230 million charge as the builder plans to abandon land option contracts and take other steps to deal with the slow housing market. The firm will also suspend its quarterly dividend.
European equity indexes were higher on Tuesday, though gains faded in late trading. In London, the FTSE 100 index was up 0.21% to 6,474.90. Germany's DAX index moved 0.29% higher to 7,829.84. In Paris, the CAC 40 index increased 0.42% to 5,708.66.
Asian markets recovered a bit from big declines on Monday. In Japan, the Nikkei 225 index edged down 0.12% to 16,249.63. In Hong Kong, the Hang Seng index rose 1.71% to 28,438.13. The Shanghai composite index slid 1.74% to 5,536.57.
Treasury Market
Bonds were moving lower in price Tuesday morning. The 10-year note was lower at 103-08/32 for a yield of 4.343%, while the 30-year bond was lower at 105-27/32 for yield of 4.637%.