NEW YORK – Stocks ended mixed Wednesday after a bigger-than-expected jump in consumer prices and prospects of more aggressive interest-rate hikes offset a dramatic drop in crude oil prices.
The Dow Jones industrial average (search) lost 14.49 points, or 0.14 percent, to finish at 10,456.02. The Standard & Poor's 500 Index (search) was up just 0.82 of a point, or 0.07 percent, to end at 1,172.53. The technology-laced Nasdaq Composite Index (search) was up just 0.88 of a point, or 0.04 percent, to close at 1,990.22.
"Probably the most important factor today is energy," said Arthur Hogan, chief market analyst at Jefferies & Co. "If we had this move in the commodity in a vacuum, I think we would have a market that was up a couple hundred points."
Oil dropped $2.22 to settle at $53.81 a barrel on the New York Mercantile Exchange (search) as a weekly government report showed a larger than expected build in crude supplies. Lower crude prices usually help the overall stock market because it eases the pressure on company profits and consumer spending.
But energy companies' shares took a hit after oil prices slid, following government inventory data that showed a big rise in U.S. crude stockpiles. Dow component Exxon Mobil Corp. (XOM) fell 1.3 percent to $60.09, and ConocoPhillips (COP) lost 1.8 percent to $105.10.
The Nasdaq stayed just barely in positive territory, helped by a jump in semiconductor stocks such as Intel Corp. (INTC), which climbed 1.6 percent to $23.39, and Qualcomm Inc. (QCOM), which rose 0.9 percent to $36.31. Semis got a lift after a report that said surplus inventories of semiconductors will be cleared out by June.
The Labor Department (search) reported a higher-than-expected 0.4 percent rise in consumer prices for February, which underscored inflation concerns highlighted in Tuesday's Fed statement. The increase in the consumer price index, the government's most closely watched inflation barometer, came after prices nudged up by just 0.1 percent in January. Economists had forecast a 0.3 percent rise
"Oil prices dropped and that helped — and the feeling is that maybe the worst of the short-term impact of the Fed move is behind us," said Michael Metz, chief investment strategist at Oppenheimer & Co.
The increase in the consumer price index (search), the government's most closely watched inflation barometer, came after prices nudged up by just 0.1 percent in January. Economists had forecast a 0.3 percent rise. Although sharp increases in energy costs — including gasoline — led the way in February, many other prices, including airfares, medical care, and for education, also went up.
Interest-rate sensitive stocks, such as banks, nudged lower. The Philadelphia KBW Bank Index fell 0.2 percent.
Commodity-related stocks slid as metals prices, such as gold, copper, zinc and aluminum fell. Aluminum producer Alcoa Inc. (AA) fell 1.8 percent to $30.39 while gold miner Newmont Mining Corp. dropped 2 percent to $41.86.
Traders said some investors were taking profits from a good run in commodity-related shares and buying technology, pharmaceutical and health stocks.
In pharmaceuticals, Pfizer Inc. (PFE) rose 2.4 percent to $26.04 and Johnson & Johnson rose 2.1 percent to $68.20. Both are Dow components.
XM Satellite Radio (XMSR) climbed 8.6 percent to $30.45, helping the Nasdaq, after Hyundai Motor Co. said it plans to offer XM Satellite Radio as standard equipment on all U.S. models around 2007.
International Business Machines Corp. (IBM) rose 1.1 percent to $90.52. IBM and Compuware Corp. settled a lawsuit in which Compuware had accused IBM of predatory pricing and antitrust violations. Compuware rose 2 percent to $7.44.
General Motors Corp. (GM) fell 3 percent to $28.66. GM, a Dow component and the world's biggest automaker, is facing a possible credit downgrade to "junk" status. The company is in talks to sell a stake in its commercial mortgage unit, a GM spokeswoman said.
GM, which shocked the market last week with a profit warning and has been losing market share, also may phase out one of its weaker car brands if sales fail to meet projections, Vice Chairman Bob Lutz said on Wednesday.
Software maker Oracle Corp. (ORCL) was a drag on the Nasdaq, falling 1 percent to $12.37 a day after the company's third-quarter revenue missed analysts' target.
Coca-Cola Co. (KO) fell 0.6 percent to $41.16. It announced the retirement of the head of its European division in a fresh shake-up of its global marketing and advertising groups to combat sluggish sales.
MCI Inc. (MCIP) was up 30 cents at $23.27 on a Journal report that its board plans to discuss about the latest buyout offer from Qwest Communications International Inc. (Q). The long-distance phone company has been under pressure to consider a Qwest bid after agreeing to smaller offer from Verizon Communications Inc (VZ). Qwest gained 3 cents to $3.80 on the news; Verizon added 45 cents at $34.91.
Decliners outnumbered advancers on the NYSE by more than 3 to 1 and by almost 2 to 1 on the Nasdaq.
Trading was heavy on the New York Stock Exchange, with 1.81 billion shares changing hands, above the 1.46 billion daily NYSE average for last year.
On the Nasdaq, about 1.79 billion shares were traded, just below the 1.81 billion daily average last year.
The Russell 2000 index, which tracks smaller company stocks, was down 6.52, or 1.05 percent, at 612.06.
Overseas, Japan's Nikkei stock average declined 0.87 percent. In Europe, France's CAC-40 shed 0.36 percent, Britain's FTSE 100 fell 0.54 percent and Germany's DAX index lost 0.08 percent.
Reuters and the Associated Press contributed to this report.