Stocks Trade in Narrow Band; Merck Rises
Stocks were slightly higher but trading in a narrow band after a batch of economic data confirmed slow growth in the U.S. economy and as traders awaited more clarity concerning a potential bailout of Ireland's banks.
TheDow Jones Industrial Average continued to bob between positive and negative territory Wednesday after falling sharplyon Tuesday.
Home Depot and Hewlett-Packard led the blue-chips lower, while Merck and McDonald's rose.
The S&P 500 and the Nasdaq advanced slightly. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell to just below 22, after reaching a one-and-a-half month high on Tuesday.
Most of the key S&P sectors were higher led by consumer discretionary, technology and health care stocks. Telecom and industrials fell.
Data on consumer prices confirmed the Federal Reserve's concerns with inflation, as the reading for the core consumer price index was the smallest year-on-year increase on record, according to the Labor Department.
The October CPI rose 0.2 percent, less than expected, after a 0.1 rise in September, but core CPI remained unchanged. The annual increase in the core CPI of 0.6 percent was the smallest since records started in 1957, the Labor Department said.
Meanwhile, housing starts hit an 18-month lowin October, falling 11.7 percent to a 519,000 annual rate from a 588,000 in September. The slide reflected a slowdown in building multiunit homes, according to the Commerce Department.
U.S. mortgage applications fell to their lowest level in four months last week as loans rates inceased, according to data from the Mortgage Bankers Association. The Energy Information Administration will release its reading on U.S. oil and gasoline inventories at 10:30 am.
In corporate news, investors were awaiting a massive stock offering from General Motors. The automaker confirmed it willincrease the size of its initial public offering by 30 percent. The IPO is set to be the largest in U.S. history if the automaker manages to raise the expected $22.4 billion.
Target was higher after forecasting the best same-store sales in three years, and earnings results that were in line with expectations. The discounter benefited from a credit card program that rewards customers with a 5 percent discount.
Chico's rose in the premarket after reporting stronger-than-expected revenues thanks largely to improved sales for trendier fashions at his White House/Black Market chain for the third quarter.
Also, BJ's Wholesale Club's earnings topped its own forecasts to report a 32 percent jump in earnings on stronger sales. The company also had a charge a year from a legal settlement.
Merck gained after news a drug developed by the pharmaceutical company to boost good cholesterol levels met its safety goals in a study that will be presented to the American Heart Association's annual meeting on Wednesday.
Financial stocks were mostly lower on Wednesday. JPMorgan Chasefell after news the bank was working with regulators and state attorneys general to resolve inquiries into foreclosure practices for the industry, the chief financial officer at the bank said Wednesday. The bank is one of several being investigated. Bank of America and Wells Fargo also slipped.
Human Genome Sciences fell and GlaxoSmithKline rose after news a U.S. Food and Drug Administration Panel approved a drug the companies developed to treat lupus.
Avanir Pharmaceuticals fell after news the drug company plans to sell more stock.
Solar stocks sank after Credit Suisse downgraded the sector to "market weight," saying there is more supply than demand for solar power. Specifically, the brokerage cut First Solar , GT Solar , ReneSola and Trina Solar to "neutral" from "outperform."
Among technology stocks, Baidu , Ctrip and Sina rose after Stifel Nicolaus began to cover the Internet services companies with "buy" ratings.
Gamestop soared after Credit Suisse raised the video game retailer to "outperform" from "neutral,"
European shares were mostly higher after declines in the previous session, but concerns over the Irish debt crisis were lingering. The European Commission, International Monetary Fund and the European Central Bank will send a team to Ireland to prepare possible steps to help the country's troubled banking sector. The team will start work Thursday.
Meanwhile, the European Union will deliver its next aid package for Greece on time, European Union Economic and Monetary Affairs Commissioner Olli Rehn said Wednesday. Austrian Finance Minister Josef Proell had said earlier the aid wouldn't be released until January.
Asian stocks ended mostly in the red with Chinese and Hong Kong indexes suffering severe declines. Japanese stocks ended in the green. Chinese Premier Wen Jiabao said the government would attempt to tame food price inflation in the region with potential price control measures.
On Tap This Week:
WEDNESDAY: Oil inventories, St. Louis Fed Pres Bullard speaks, GM IPO pricing, LA auto show kicks off, Qualcomm analyst meeting; Earnings from Applied Materials.
THURSDAY: Weekly jobless claims, leading indicators, Philadelphia Fed survey, Cisco shareholder meeting; Earnings from Dell and Gap.
FRIDAY: Bernanke speaks at ECB Central Banking Conference, Harry Potter movie premieres.
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