Stocks were expected to open lower Wednesday as oil pushed toward a price of $100 per barrel and news from the Federal Reserve on Tuesday continued to spark fears about the economy.
Major indexes were able to pull out of a four-day skid Tuesday, though the session was quite volatile, as equities started strong, slipped into the red near midsession, and then clawed their way back into the green in the final hour of trading. The Dow Jones industrial average closed higher by 51.7 points, or 0.4%, to 13,010.14, moving back above the psychologically significant 13,000 level. The broader S&P 500 index gained 6.43 points, or 0.45%, to 1,439.7. The tech-heavy Nasdaq composite index added 3.43 points, or 0.13%, to 2,596.81.
Outside of the major indexes, action in the broader market was not as positive. On the New York Stock Exchange, 17 shares declined in price for every 16 that advanced. NASDAQ breadth was 18-12 negative.
On Wednesday, many traders were betting the Federal Reserve would again need to cut interest rates. A Fed quarterly outlook report, released Tuesday, suggested the U.S. economy could be sluggish for three years.
U.S. jobless claims fell 11,000 to 330,000 last week, and the four-week moving average fell slightly. "We judge this level of claims to be consistent with continued moderate job creation," Bear Stearns chief U.S. economist John Ryding wrote. "Claims thus far do not suggest a major slowing in economic activity in the fourth quarter."
The U.S. MBA index, a measure of the mortgage market, fell 3.6% for the week ended Nov. 16. Average mortgage rate mostly held steady at 6.18% on the 30-year fixed loans. A report on consumer sentiment is released later on Wednesday morning.
Oil is making another push toward the $100 level. On Tuesday, January West Texas crude oil futures rose $3.46 to $98.03 per barrel, and on Wednesday morning oil was up another 14 cents. Energy inventory data arrive later Wednesday morning.
Among stocks in the news Wednesday, Deere & Co. (DE) reported quarterly earnings of $1.88 per share, vs. $1.20 a year ago to end its fiscal year. Worldwide net revenue was 20% higher, and the firm expects equipment sales to increase about 25% in the first quarter of 2008.
Abercrombie & Fitch Co. (ANF) reported earnings of $1.29 per share, vs. $1.11 a year ago as same-store sales rose 1% and total sales were up 13%. The teen retailer expects earnings per share of $3.63 to $3.67 in the second half of its fiscal year.
Another retailer, Limited Brands (LTD), reported earnings of 3 cents per share, vs. 6 cents a year ago. Same-store sales were 3% lower and net sales fell 9%. It now expects same-store sales to fall in November, vs. the flat sales it had previously predicted. Also, Limited authorized the buyback of $250 million shares.
A member of the hot solar energy sector, Trina Solar (TSL) disappointed investors with lower than expected earnings of 29 cents per share despite sharply higher revenue.
European indexes were moving lower Wednesday. In London, the FTSE 100 index dropped 1.73% to 6,119. In Paris, the CAC 40 index fell 1.93% to 5,400.57. Germany's DAX index declined 1.86% to 7,488.75.
Asian markets also lost ground. Japan's Nikkei 225 index lost 2.46% to 14,837.66. In Hong Kong, the Hang Seng index plunged 4.15% to 26,618.19.
Treasury Market
Bonds were moving higher on bets the Federal Reserve will be forced to cut interest rates again soon. The two-year notes were aup 07/32 to 101-01/32 for a yield of 3.068%; 10-year notes rose 23/32 to 102-01/32 for a yield of 4.007%; and the 30-year bond up 1-06/32 to 109-14/32 for a yield of 4.428%.