Stocks Flop as FedEx Skids; BP Gains Over 1%

Stocks ended a rocky session flat Wednesday as a drop in housing starts and disappointing outlook from FedEx offset a strong industrial-production report.

The market started the day lower, then steadily climbed higher as the day went on but began to falter in afternoon trading and never recovered.

The Dow Jones Industrial Average rose 4.69, or less than a tenth of a percent, to close at 10,409.46, after gaining over 200 points on Tuesday.

The S&P 500 ended down less than a tenth of a percent, while the Nasdaq finished flat. The CBOE volatility index, widely considered the best gauge of fear in the market, was around 26 at the closing bell.

Investors should separate the economy from what companies are doing and focus on the earnings news over the short-term, said Marc Pado, U.S. market strategist at Cantor Fitzgerald.

“Domestic earnings are going to be very strong and comparisons are going to be very easy compared to the second quarter of 2009,” said Pado. “That’s the driving force for this market rally which we think will carry the S&P to around 1,150 to 1,170 area between now and the end of July.”

BP shares actually finished up 1.4 percent after the company said it won't pay a dividend for the year. The White House and BP executives tentatively agreed that the oil giant will create a $20 billion fundto pay claims for the spill.

Dampening sentiment earlier was news that a rescue plan was being prepared for Spain, but the EU and IMF denied the report.

Billionaire investor George Soros said Europe faces almost inevitable recessionnext year and years of stagnation as policymakers' response to the euro zone crisis causes a downward spiral.

Investor Jim Rogers told CNBC that he bought the eurobut said he's skeptical whenit comes to European governments' promises of austerity.

The euro retreated from a two-week highamid worries about Spain. Oil rose to settle at $77.67 a barrel and gold slipped nearly $4, settling at $1,229.30 an ounce.

FedEx shares skidded 6 percent after the economic bellwether hit its earnings target and exceeded its revenue target but delivered a disappointing outlook. In contrast, the stock of FedEx's rival UPS was higher.

And US-traded shares of Nokia tumbled 11 percent after the Finnish handset maker issued a profit warning, saying its earnings will be hit by tough competition in the smartphone market.

These warnings came a day after Best Buy missed earnings expectations amid a sharp drop television prices. Also, at least two brokerages cut their price targets on the electronics retailer.

Some investors worried that the FedEx outlook was a bad omen for earnings season— that more companies may follow and that it could signal a double-dip is coming.

But Nadav Baum, executive vice president at BPU Investment Management in Pittsburgh, said don’t read too much into individual warnings.

“I think we’re in a rebound mode … Some companies will disappoint — it’s not a reflection on the economy or the market,” he explained.

Apple rose nearly 3 percent after the company announced strong sales of the iPad.

But AT&T shares fell after problems with ordering the new iPad and a security glitch on the company's Web site that sent some customers into other customers' accounts. The firm is also suspending preorders of the latest Apple iPhonewhile it tries to meet the fulfill number of orders it has already received.

Netflix shares continued to rise, even as one analyst downgraded the stock to "hold" from "buy" amid concerns about competition from was one of the top gainers on the Nasdaq after Goldman Sachs upgraded the stock to "buy" from "neutral" and raised the firm's price target to $240 from $230.

In the day's economic news: Housing starts dropped 10 percentto a five-month low in May. Separate reports showed producer prices fell 0.3 percent and industrial production surged 1.2 percent last month, while mortgage applications jumpedlast week.

In the financial sector, Goldman Sachs is facing a wave of complaints from consumers over the business practices of its mortgage servicing unit, a subsidiary that collects payments on hundreds of thousands of loans worth tens of billions of dollars.

The Wall Street giant apparently met with over 100 retired partners on Tuesday to reassure them that clients weren't leaving amid the fraud charges.

As lawmakers are in the midst of finalizing a sweeping overhaul of financial regulations, Citigroup said that the proposed reforms are expected to dent the profits of big U.S. banks including Morgan Stanley , JPMorgan and Bank of America as the rules impose a number of restrictions on their traditional way of functioning.

Johnson & Johnson was flat after the pharmaceutical firm recalled four additional lots of Benadryl allergy tablets and one lot of Extra Strength Tylenol gels. The firm said it inadvertently failed to include them in a wider recallof over the counter drugs on January 15.

Shares of Fannie Mae and Freddie Mac were halted following news that both were being asked to delist from the New York Stock Exchange and other national exchanges.

Shares of the Chicago Board Options Exchange retreated after jumping 12 percent on their debut.

Electric-car maker Tesla is expected to launch an IPO later this month, according to IPO-research firm Renaissance Capital. Shares are expected to be priced between $14 and $16.

Volume was light, with less than 1.2 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 3 to 2.

Still to Come:

THURSDAY: CPI; weekly jobless claims; current accounts; leading indicators; Philadelphia Fed survey; BP CEO testifies
FRIDAY: Quadruple witching; S&P indexes rebalanced

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