Blue Chips End Up on Oil-Price Drop
NEW YORK (Reuters) - U.S. blue-chip stocks eked out slim gains on Wednesday, as a drop in oil prices prompted investors to buy recently beaten-down shares.
But the technology-packed Nasdaq ended slightly lower after a disappointing outlook from online travel booker and media conglomerate InterActiveCorp. .
Oil futures dropped more than $1 in New York after an unexpected rise in U.S. gasoline inventories and after OPEC said it has spare production capacity. Contributing to the price drop was a comment from troubled Russian oil company YUKOS, which said bailiffs will allow it to continue to pump oil.
The drop in oil prices helped push the market higher late in the session, said Paul Cherney, chief market analyst at Standard & Poor's.
"It's certainly a contributing factor," Cherney said. "That -- plus the fact that we are in an area of prices on the chart, where the buyers came in before."
The Dow Jones industrial average rose 6.27 points, or 0.06 percent, to close at 10,126.51, according to the latest data. The Standard & Poor's 500 Index slipped 1.06 points, or 0.10 percent, to 1,098.63. But the technology-laced Nasdaq Composite Index fell 4.36 points, or 0.23 percent, to 1,855.06.
Trading was moderate, with about 1.37 billion shares changing hands on the New York Stock Exchange, below the 1.4 billion daily average for last year. About 1.66 billion shares were traded on Nasdaq, below the 1.69 billion daily average last year.
The number of advancing issues was about even with the number of decliners on the NYSE, Decliners outnumbered advancers by about 17 to 14 on Nasdaq.
On the New York Mercantile Exchange, crude oil for September delivery fell $1.32 to settle at $42.83 a barrel -- sharply below the record high of $44.34 hit in overnight electronic trading. That was the highest price in the NYMEX futures contract's 21-year history.
Oil prices have risen by more than one-third since the end of 2003 on worries that accelerating global demand has left supplies tightly stretched with little leeway for disruption.
As crude oil prices fell sharply Wednesday afternoon, the stock market rallied from its lows but was not able to hold all of its gains until the close.
"The market is really driven here by short-term traders. Serious investors have taken the summer off and the momentum traders are motivated largely by the change in oil prices," said Michael Metz, chief investment strategist at Oppenheimer & Co.
Exxon Mobil also was the biggest weight on the Dow and fell 65 cents, or 1.4 percent, to $46.24. ChevronTexaco dropped $2.06, or 2.1 percent, to $96.60.
Shares of InterActiveCorp. fell $4.23, or 16 percent, to $22.80 and exerted the biggest negative pull on the Nasdaq.
Telecommunications equipment maker Ciena Corp.'s shares tumbled after it said third-quarter sales will miss expectations. Ciena was downgraded earlier on Wednesday by JP Morgan to "underweight" from "neutral."
Ciena's stock dropped 68 cents, or 25 percent, to $2.08, just above the all-time low of $2.06 it hit during the session.
Eli Lilly & Co. rose after it said U.S. regulators have approved its new antidepressant, Cymbalta, a drug that analysts say will be central to the company's growth.
Lilly was up 43 cents at $63.65.
Industrial conglomerate Honeywell International Inc. fell 34 cents to $36.66, after UBS downgraded it to "reduce" from "neutral." Among the factors UBS noted in the downgrade was a slowdown in defense spending.
In some encouraging economic news, the Commerce Department said factory orders advanced 0.7 percent in June, after a revised 0.4 percent gain in May. Economists had expected June factory orders to rise 0.5 percent.
The data were more upbeat than many June numbers and dovetailed with an Institute for Supply Management poll on Monday showing U.S. factories picked up their pace in July.
A separate ISM report on Wednesday showed that strength spilled into the service sector, which accounts for 80 percent of the U.S. economy. The ISM non-manufacturing index rose to 64.8 in July from 59.9 in June. Wall Street had expected a weaker 61.0 reading.
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