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Stocks trade mixed after 2-day rally
2008-12-09
NEW YORK - Wall Street traded widely mixed Tuesday after a two-day rally as investors eyed a grim outlook from FedEx Corp. and job cuts at Sony Corp. The Dow Jones industrial average fell more than 100 points in erratic trading, while the technology-heavy Nasdaq composite index rose. Investors worry that companies' troubles could make an economic turnaround difficult. FedEx cut its forecast for fiscal 2009 earnings and capital spending late Monday as the slumping economy eroded package deliveries. And electronics maker Sony Corp. said it is slashing 8,000 jobs, or 4 percent of its global work force, to cut costs by $1.1 billion a year as the worldwide downturn batters profits But in a sign that the market is looking ahead to an eventual recovery in the economy, battered chipmaker stocks saw some buying Tuesday despite a disappointing outlook from Texas Instruments Inc. "A lot of pundits argue that those that come out of the recession first are technology stocks," said Jim Herrick, manager of equity trading at Baird & Co. Investors' anxiety about the struggling economy has recently been accompanied by the feeling that the market has already bottomed out. Since reaching multi-year trading lows in late November, the Dow has risen about 20 percent and the broader Standard & Poor's 500 index has risen about 23 percent. And on Friday and Monday, the Dow logged a two-day rally of 560 points. "The economic news still stinks ... but what's going on is that people are no longer looking at the present. They're looking at the future," said Alfred E. Goldman, chief market strategist at Wachovia Securities. "They're beginning to assess that all the dramatic fiscal and monetary stimulus already on the table and more to come will turn this economic around maybe next summer." Still, when it comes to a potential stock market rebound, "it's not going to be a one-way trip," Goldman said. "We still have a ton of dismal news, and so much technical and emotional damage done, that investor confidence is going to come back slowly, not quickly." Wall Street is also waiting for lawmakers to finish negotiating a $15 billion bailout for General Motors Corp. and Chrysler LLC. A deal, which might occur as early as Wednesday, reportedly would give the government an ownership stake in the automakers. The market has been concerned that a collapse of GM, Chrysler or Ford Motor Co. would trigger massive job losses, and further stymie the government's efforts to lift the U.S. out of a recession. In midday trading, the Dow Jones industrial average fell 108.64, or 1.22 percent, to 8,825.54. Broader stock indicators were mixed. The Standard & Poor's 500 index fell 4.39, or 0.48 percent, to 905.31. The Nasdaq composite index rose 12.76, or 0.81 percent, to 1,584.50. The Russell 2000 index of smaller companies rose 1.33, or 0.28 percent, to 482.71. Decliners outnumbered advancers by a narrow margin on the New York Stock Exchange, where volume came to 425.1 million shares. FedEx shares sank $7.43, or 10 percent, to $67.00 after its announcement, while Texas Instruments rose 91 cents, or 6.2 percent, to $15.73. Sony rose 95 cents, or 4.7 percent, to $20.99. In economic news, the National Association of Realtors said its October index of pending home sales slipped, but by less than economists anticipated. Bond prices slipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.75 percent from 2.74 percent late Monday. The yield on the three-month T-bill, considered one of the safest investments, held steady at 0.01 percent, indicating a high degree of investor uneasiness. The dollar rose against most other major currencies, while gold prices slipped. Oil prices fell even amid investor expectations that OPEC will announce a big production cut next week to curb crude's stunning 70 percent-free-fall over the past five months. Light, sweet crude fell 89 cents to $42.82 a barrel on the New York Mercantile Exchange. Stock markets were mixed overseas. Hong Kong's Hang Seng index closed down 1.94 percent after a big surge on Monday, while Japan's Nikkei 225 added 0.80 percent. Major European bourses rose, with Britain's FTSE-100 climbing 1.09 percent, Germany's DAX advancing 1.44 percent, and France's CAC-40 adding 1.81 percent. ___ On the Net: New York Stock Exchange: http://www.nyse.com Nasdaq Stock Market: http://www.nasdaq.com
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