Blue Chips Rise, Nasdaq Hurt by Apple

Blue-chip stocks edged higher on Wednesday as a report showing August durable goods orders rose more than expected lifted sentiment, but a rally in crude oil prices kept alive worry about the effect of high fuel costs on the economy.

The Dow Jones industrial average (search) was up 16.88 points, or 0.16 percent, to end at 10,473.09 and the S&P 500 Index (search) was up 1.23 points, or 0.10 percent, to finish at 1,216.89. The Nasdaq Composite Index (search) was down 1.02 points, or 0.05 percent, to close at 2,115.40.

Apple Computer Inc. (AAPL) fell 4.4 percent to $51.08, hurting Nasdaq. The company admitted some of its new iPod nano digital musical players have screens that crack.

Paychex Inc. (PAYX) soared 9.3 percent to $37.25, adding a lift to the Standard & Poor's 500. On Tuesday, the provider of payroll services said quarterly earnings rose, and it boosted its forecast for fiscal 2006 revenue growth.

"It's good news that the durable goods orders were stronger than expected, but those are August numbers and probably don't carry that much weight," said Hugh Johnson, chief investment officer of Johnson Illington Advisors. "The price of oil at these levels still raises questions about the outlook for the economy, even when you get a good durables" report.

A Commerce Department (search) report earlier in the day showed orders for durable goods rose a better-than-expected 3.3 percent last month, up from a revised 5.3 percent drop in July. Analysts polled by Reuters had forecast an August gain of just 0.8 percent.

Near the market close, Fannie Mae (FNM) shares plunged following a Dow Jones report that investigators have found new accounting violations in the mortgage finance enterprise's books.

Its stock fell nearly 11 percent to $41.71 on the New York Stock Exchange (search), its biggest one-day drop since October 1987. The decline wiped out nearly $5 billion of the company's market value.

U.S. crude oil futures for November delivery settled up $1.28 at $66.35 a barrel after soaring above $67 a barrel earlier in the session.

Supply data from the Energy Information Administration showed U.S. crude stockpiles fell 2.4 million barrels last week, while analysts had expected a decline of 1 million barrels.

Among Dow components, declining shares included big manufacturers like Caterpillar (CAT) and 3M Co. (MMM), which are sensitive to rising energy costs.

Heavy-equipment maker Caterpillar lost nearly 2 percent, or $1.17, to $57.55 and industrial conglomerate 3M slipped 0.7 percent, or 50 cents, to $72.68. Both trade on the NYSE.

Trading was active, with 1.58 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.75 billion shares were traded on Nasdaq, just shy of the 1.81 billion daily average last year.

The number of shares rising on the NYSE was slightly ahead of those on the decline. On Nasdaq, declining shares outnumbered advancing shares by about 4 to 3.

The stock of generic drugmaker Mylan Laboratories Inc. (MYL) climbed 6.6 percent, or $1.16, to $18.84 on the NYSE after it won a patent dispute with Johnson & Johnson's (JNJ) Alza Corp. over a generic version of Alza's urinary incontinence drug.

General Motors of Canada reached a three-year contract with the Canadian Auto Workers Union, avoiding a strike. Shares of GM (GM), the world's largest automaker, edged up 7 cents to $30.84 on the NYSE.