NEW YORK – Stocks ended mixed Tuesday as a broad market rally reversed course after a regional Federal Reserve official hinted the central bank is not done raising interest rates, contradicting earlier comments by Fed chairman Alan Greenspan.
Major gainers for the day included General Motors Corp. (GM) , the biggest percentage advancer on the Dow Jones industrial average, which announced major U.S. job cuts, and Monsanto Co. (MON), which led the Standard & Poor's 500.
The Dow Jones industrial average (search) closed up 16.04 points, or 0.15 percent, at 10,483.07 — sharply below its session high of 10,578.84. But the technology-laced Nasdaq Composite Index (search) closed down 8.60 points, or 0.41 percent, at 2,067.16, after earlier climbing as high as 2,095.96. And the Standard & Poor's 500 Index (search) ended down 0.25 points, or 0.02 percent, at 1,197.26, after rising as high as 1,208.85.
"The Fed officials took us on a roller coaster," said Hugh Johnson, chief investment officer of Johnson Illington Advisors.
The Dow had surged more than 111 points before Federal Reserve Bank of Atlanta (search) President Jack Guynn (search) said in a speech that the Fed's Open Market Committee was not yet ready to stop its policy of modest rate hikes. Guynn's comments set off profit-taking that left the Dow with a minimal gain and the S&P 500 and Nasdaq with slight losses.
It was an earlier, bullish assessment of the economy from Greenspan, given in a speech broadcast at a meeting of central bankers in Beijing late Monday, that triggered the initial advance. Greenspan said the economy would remain strong and intimated that the Fed could soon stop raising interest rates, at least for the short term.
With seemingly dueling comments from the Fed committee members, investors remained confused as to whether the economy was headed for a harsh slowdown and whether the Fed would continue raising interest rates through the summer.
"The cross currents here are nothing like I've ever seen," said Brian Pears, head equity trader at Victory Capital Management in Cleveland. "There's a lot of confusion and uncertainty over everything — the dollar, interest rates, oil, all sorts of things."
The bond market moved higher as the stock market began to sell off. The yield on the 10-year Treasury note fell to 3.90 percent from 3.95 percent late Monday. The dollar rose against the euro but fell against the Japanese yen, while gold prices moved higher.
Oil prices slid for a second straight session, with a barrel of light crude quoted at $53.76, down 73 cents, on the New York Mercantile Exchange (search).
General Motors Corp. (GM) helped the Dow hold on to at least part of the session's gains. The struggling automaker said it will cut 25,000 jobs by 2008 as it attempts to rein in spending. Chief Executive Rick Wagoner said the company expects to close additional assembly and component plants as well. GM gained 31 cents to $30.73.
Investors welcomed the cuts, which they saw as harbingers of lower costs at the world's largest automaker.
"What you'll see out of the Big Three in the U.S., they will continue to ship jobs overseas," said Michael Bee, lead equity strategist at Boyd Watterson Asset Management LLC, a Cleveland, Ohio-based company with $3.7 billion under management. "You just really can't compete with some of these foreign producers."
Monsanto Co. (MON), the seed and chemical company, rose almost 5 percent, or $2.83, to $61.63 after it raised its outlook for quarterly operating earnings and unveiled a deal to bring a former chemicals affiliate out of bankruptcy. Monsanto was the S&P 500's biggest percentage gainer.
After moving higher most of the session, Albertson's Inc. (ABS) slipped 5 cents to $21.45 as the nation's second-largest grocery store chain tripled its quarterly earnings from a year ago. Albertson's credited the addition of the Shaw's chain as well as continued recovery in southern California from last year's grocery worker strike.
McDonald's Corp. (MCD) fell 2.8 percent, or 84 cents, to $29.57 on the NYSE and helped limit the Dow's gains. Earlier, the fast-food company said the head of European business, Russ Smyth, a 21-year veteran, was leaving.
The Nasdaq was pulled lower by Sears Holdings Corp. (SHLD) , down 8.7 percent at $141.50. Before the start of trading, Sears posted a $9 million net loss for its first quarterly result since Kmart acquired Sears to form the nation's third-largest retailer.
With the third quarter ending this month, companies are starting to issue forecasts for their results. ConAgra Foods Inc. (CAG) slid $1.41 to $24.48 after the company said it could miss Wall Street's quarterly earnings targets by as much as 10 cents per share. The food processor is also cutting several hundred jobs in an effort to save up to $100 million a year.
Trading was active, with 1.45 billion shares changing hands on the New York Stock Exchange, just below the 1.46 billion daily average for last year. About 1.89 billion shares traded on Nasdaq, just above last year's 1.81 billion daily average.
The number of shares that rose exceeded the number that fell, with roughly nine stocks advancing for every seven that fell on the NYSE.
On Nasdaq, decliners outnumbered advancers by a ratio of about 8 to 7.
The Russell 2000 index of smaller companies was up 0.84, or 0.13 percent, at 623.78.
Overseas, Japan's Nikkei stock average fell 0.47 percent. In Europe, Britain's FTSE 100 was up 0.9 percent, France's CAC-40 rose 0.83 percent for the session, and Germany's DAX index climbed 1.53 percent.
Reuters and the Associated Press contributed to this report.