Stocks ended flat Wednesday as tech and consumer stocks rebounded but banks dragged after a credit downgrade on more than a dozen companies.
The Dow Jones Industrial Average shed just 7.49 points, or about 0.1 percent, to close at 8,497.18. That came after back-to-back triple-digit losses that shaved 3.4 percent off the Dow. The S&P 500 also lost about a tenth of one percent, while the Nasdaq climbed 0.7 percent.
“I look at the [market weakness] as a buying opportunity,” Gary Hager, president and founder of Integrated Wealth Management, told CNBC. “I’ve been bullish for a while … When the March lows were set and when we climbed out of there, we saw the worst past us.”
The CBOE Volatility Index, widely considered the best gauge of fear in the market, slipped nearly 4 percent, finishing at 31.47.
The day's big economic data point was consumer prices, which rose just 0.1 percentin May. Traders were relieved that inflation wasn't any worse last month.
Still, some market pros said it's not current inflation that's worrisome — it's the potential for a surge in inflation over the next two years.
The more troubling reportthis morning was mortgage applications, which fell 15.8 percentto 514.4 last week, the lowest in nearly seven months, as rising mortgage rates scared away some buyers.
And the trade deficit fell nearly 35 percent to $101.5 billion in the first quarter, the lowest since the fourth quarter of 2001 during the last recession.
The market had started off the day on negative footing after FedExsaid its earnings outlook was lower than Wall Street anticipated.
FedEx shares slipped 1.4 percent after the package-delivery giant and economic bellwether beat earnings expectations but fell short of analysts' projections with its outlook.
General Electric was the biggest percentage decliner on the Dow.
The market was also buzzing about President Obama's financial-reform plan, which got mixed reviews from Wall Street.
Ralph Schlosstein, CEO of Evercore Partners, said the plan was "squarely in the middle," offering "rules that protect the system" while at the same time unleashing the "competitive spirits of capitalism."
But legendary investor George Soros warned against relying too much on regulators, in an opinion piece in the Financial Times.
Obama told CNBC in an interview Tuesday that the US is not in danger of overregulating the economy.
"If we've got rules of the road, that's what makes capitalism thrive," Obama said in a taped interview. "That's why people invest in this country."
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Bank stocks took a hit after Standard & Poor's cut its credit rating on 18 banks, citing concerns about volatile conditions and tighter regulations. Among them were: BB&T, Capital One Financial, Regions Financial and Wells Fargo.
The S&P lowered its outlook on four other banks, but didn't cut their credit ratings. Those banks are: PNC Financial and M&T Bank , First National Bank of Omaha and Valley National Bancorp .
Meanwhile, a slew of banks started repaying their TARP loans today, including US Bancorp, Goldman Sachs, Morgan Stanley, BB&T and Bank of New York Mellon .
Morgan Stanley is also going to start allowing hedge-fund clients to place some of their holdings in a trust bank, a new layer of asset protection, in an attempt to win back hedge-fund clients it lost after it was forced to become a bank-holding company in order to get those federal funds.
Techs started lower but rebounded in afternoon trading, with chips up after a couple of upgrades.
Intel rose 1.8 percent as the chip giant plans to abandon the Centrino brand of chips for PCs, the Wall Street Journal reported.
Qualcomm climbed 3.8 percent after Goldman added the chip stock to its "conviction buy" list.
And Nvidia added 2.5 percent after UBS upgraded its rating on the stock to "neutral" from "sell."
Adobe advanced 1.8 percent after two analyst price-target increases and one decrease after the software maker posted its narrowest profit marginin more than 3 years but revenue fell less than expected. The company also said it would start charging users for an online version of Acrobataimed at heavy business users. They will charge $14.99 a month for the basic application, which allows for Web meetings of up to five users and conversion of up to 10 uploaded documents to pdf format.
Consumer stocks also rebounded, ringing up gains in everything from department-store operator JCPenney to credit-card provider MasterCardand fast-food chain McDonald's.
Oil climbed about 50 cents to close at $71.03 a barrel, snapping a three-day losing streak, after official government data showed crude inventories fell by 3.9 million barrelslast week but gasoline inventories rose by 3.4 million barrels.
Commodity and heavy industrial stocks continued to slide, with Alcoa and Caterpillar joining banks at the bottom of the Dow pack.
The tone for the U.S. stock market is still — at least in the short term — a negative one. The Dow has suffered consecutive triple-digit losses, with both the Dow and S&P 500 chalking up their biggest two-day declines since late March.
Still to Come:
THURSDAY: Weekly jobless claims; leading indicators; Philly Fed index; Earnings from Research In Motion
FRIDAY: Quadruple witching
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