Stocks mixed as oil prices climb; tech shares stay high despite semiconductor woes
By Michael J. Martinez AP Business Writer
NEW YORK (AP) – Stocks closed mixed Wednesday as a lower reading on manufacturing activity and rising oil prices chilled an early spate of bargain hunting, but technology shares still eked out a modest advance.
The first rise in oil prices after seven sessions of declines added an element of gloom to a market already made sluggish by lackluster trading. Government data showed a steep drop in U.S. oil inventories last week as imports fell and refiners continued to operate at unusually high rates, sending light crude for October delivery soaring $1.78 to $43.90 on the New York Mercantile Exchange.
Underscoring how exaggerated market moves can be when volume is light, the major indexes sank at midday on reports of a possible terror attack in Washington, D.C. The market stabilized after it became clear the incident stemmed from the accidental release of pepper spray in a restaurant near the World Bank and International Monetary Fund, which are under heightened alert. Despite that, Wall Street never fully regained its momentum.
“When you combine the rise in oil prices with the false-alarm bioterrorist alert, both of those events really took the steam out of the market,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC.
According to preliminary results, the Dow Jones industrial average closed down 5.46, or 0 percent, at 10,168.46.
Broader stock indicators were narrowly higher. The Standard & Poor’s 500 index rose 1.67, or 0.2 percent, to 1,105.91. The tech-focused Nasdaq composite index gained 12.31, or 0.7 percent, to finish at 1,850.41.
With trading light, as it has been all week due to the Republican National Convention and the upcoming Labor Day holiday, the markets were slow to react to the Institute for Supply Management’s manufacturing index for August. Manufacturing activity rose for the 15th consecutive month, suggesting healthy activity in the sector, but the reading of 59 was three points lower than the one recorded for July, and fell short of economists’ expectations.
Many market participants were looking ahead to Friday, when the Labor Department was to release its data for August. After two months of anemic employment growth, Wall Street is hoping for a stronger labor market.
“The market really needs to see some positive economic statistics, and we haven’t been getting them lately,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “The next few days are going to be critical to see where we stand, and to see whether or not we’re in an economic soft patch … or if we’re in a slump.”
Sagging monthly sales figures from the nation’s two largest automakers offered little encouragement. General Motors Corp. lost 10 cents to $41.21 and Ford Motor Co. declined 21 cents to $13.90 after the companies said production cuts could dent fourth-quarter profits.
Intel Corp.’s midquarter report was expected to highlight what’s ahead for the tech sector. While there has been some concern that a negative outlook from the chipmaker would weigh heavily on tech shares, a round of analyst downgrades and lowered forecasts spurred speculative buying, leading analysts to surmise that investors may have already factored in a mediocre forecast. Intel ended the day up 14 cents at $21.43.
Among other chip stocks, Fairchild Semiconductor International Inc. added 3.6 percent, or 45 cents, to $12.78, after reiterating its third-quarter outlook from July. And chip equipment maker Teradyne Inc. gained 3 percent, or 38 cents, to $13.25, although WR Hambrech cut its third-quarter earnings target.
August sales reports were expected Thursday from the nation’s largest retailers. Among those reporting early, Wendy’s International Inc. gained 89 cents to $35.26 after posting strong sales despite 100 temporary restaurant closures due to Hurricane Charley and other storms. Same-store sales, those from restaurants open at least a year, rose 2.8 percent, the company said.
Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange.
The Russell 2000 index of smaller companies was up 2.77, or 0.5 percent, at 550.70.
Overseas, Japan’s Nikkei stock average finished 0.4 percent higher Wednesday. In Europe, France’s CAC-40 rose 0.5 percent, Britain’s FTSE 100 added 1 percent and Germany’s DAX index climbed 0.9 percent.
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AP-ES-09-01-04 1627EDT