NEW YORK – Stocks closed virtually unchanged Wednesday as investors digested strong earnings from technology company Jabil Circuit (JBL) and reassuring reports on the U.S. oil inventory front, along with negative earnings news from Ford Motor Co. (F).
The Dow Jones industrial average (search) was down 11.74 points, or 0.11 percent, to end at 10,587.93. The Standard & Poor's 500 Index (search) was up 0.27 point, or 0.02 percent, at 1,213.88. The technology-laced Nasdaq Composite Index (search) was up 0.96 point, or 0.05 percent, at 2,092.03.
"The market is searching for meaning out of the news and isn't ready to forecast where they think oil prices will be," said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp. "It's a reactive situation."
The oil report erased stocks' earlier gains that came on the heels of robust earnings from technology company Jabil Circuit Inc. and a drop in long-term U.S. Treasury interest rates.
"The oil inventory data is helping the market a little bit. But there is a limited upside here because you are trading back to the high end of the range," said Elliot Spar, market strategist with Ryan Beck & Co. "If we consistently stay around $60 a barrel it is going to be a drag on the economy and people will start talking down earnings numbers in the second half of the year."
U.S. crude oil futures ended down almost $1 Wednesday after government inventory data showed a supply drop for the third week running, but within market expectations. Crude for August delivery settled down 95 cents at $58.09 a barrel on the New York Mercantile Exchange (search).
"Seems like investors are focused on oil prices, which traded in a tight range today and didn't indicate in which direction it would break, up or down," said Steve Neimeth, portfolio manager at AIG SunAmerica Asset Management.
U.S. crude oil inventories dropped for the third straight time last week, falling by 1.6 million barrels, as imports fell. Analysts had forecast that crude inventories declined by 1.7 million barrels in the week ended June 17.
Higher oil prices are generally a negative for stocks since they drive up corporate expenses and eat into consumer discretionary spending.
Falling U.S. Treasury bond yields boosted bank stocks, but they also raised fears of a slowdown in Europe hurting U.S. corporate profits in general. Oil prices hovering around $58 a barrel were also an overhang on the market.
Ford shares fell 4.4 percent, or 49 cents, to $10.68 on the New York Stock Exchange (search) after the company reduced its profit outlook for the year, following Tuesday's closing bell. On Wednesday afternoon, Moody's Investors Service said it may cut Ford's debt ratings to junk status.
Shares of General Motors Corp. (GM) fell 3 percent, or $1.09, to $34.82 and were one of the biggest drags on the blue-chip Dow average, while the stock of auto component maker Dana Corp. dropped 1.8 percent to $14.85.
Stocks have traded in a narrow range for weeks in anticipation of the Federal Reserve's (search) Open Market Committee meeting June 29 and 30. Investors expect the Fed to raise rates for the ninth time since last year at the meeting; what they're waiting for are signs of the Fed's longer term plans for rates.
The price of the benchmark 10-year U.S. Treasury note climbed Wednesday, while its yield dipped below 4 percent, a key technical level, on talk of interest-rate cuts in Europe, soaring oil costs and a bold call from an influential fund manager suggesting the Federal Reserve may soon stop tightening interest rates. Late Wednesday afternoon, the 10-year Treasury note's yield was at 3.94 percent, down from 4.04 percent at Tuesday's close, while its price, which moves in the opposite direction, was up 27/32 at 101-15/32.
Interest rates on different kinds of loans and mortgages are all tied partly to 10-year and 30-year Treasurys.
Bank stocks gained following the drop in U.S. Treasury yields on optimism about lower borrowing costs and a likely increase in demand for loans. Dow component JPMorgan Chase & Co. (JPM) rose 0.6 percent, or 22 cents, to $36.26 and Wells Fargo & Co. gained 0.4 percent, or 22 cents, to $61.71.
Shares of Dow component General Electric Co. (GE) fell 1.2 percent, or 43 cents, to $35.72. The conglomerate, whose businesses range from jet engines to media group NBC Universal, said its global short-cycle industrial orders rose in May from a year ago, but the rate of increase fell from April.
Ameritrade Holding Corp. (AMTD) said it was rejecting a takeover offer from E-Trade Financial Corp. (ETRD) and would instead aquire rival online brokerage TD Waterhouse from Toronto-Dominion Bank. Ameritrade's stock climbed $3.05 to $17.87, while Toronto-Dominion rose 54 cents to $44.15.
Contract electronics maker Jabil (JBL) late Tuesday posted higher income in its fiscal third quarter and lifted its outlook for the rest of 2005. Its shares rose 6.2 percent to $30.20
Cisco's (CSCO) CEO, John Chambers, on Tuesday said sentiment on technology spending has improved in recent months. Cisco, the largest maker of Internet equipment, rose 1 cent to $19.78.
Gannett Co. (GCI), the nation's largest newspaper company, said growth in second quarter earnings will likely be lower than expected. Nonetheless, the stock fell 12 cents, to $74.10.
Earnings for embattled investment bank Morgan Stanley (MWD) fell 24 percent in the second quarter and came in short of analyst expectations. The company blamed the drop on difficult market conditions and high legal expenses from high-profile lawsuits against the firm. Morgan Stanley dropped 45 cents to $50.52.
Throughout Wednesday's session, stocks were in a tight range and trading volume was lighter than usual. On the New York Stock Exchange, 1.35 billion shares changed hands, below the 1.46 billion daily average for last year. On Nasdaq, about 1.70 billion shares traded -- below the 1.81 billion daily average last year.
The Russell 2000 index of smaller companies was up 2.41, or 0.38 percent, at 643.45.
Overseas, Japan's Nikkei stock average rose 0.51 percent. Britain's FTSE 100 was up 0.34 percent, Germany's DAX index was up 0.25 percent, and France's CAC-40 was up 0.18 percent.
Reuters and the Associated Press contributed to this report.