NEW YORK – U.S. stocks edged lower Wednesday in light volume as selling of transport stocks on a disappointing outlook from FedEx Corp. (FDX) offset early buying spurred by the latest round of global mergers and acquisitions.
Shares of FedEx Corp. fell 1.9 percent, or $2.20, to $111.85. The descent of FedEx's stock dragged down the shares of rivals such as United Parcel Service Inc. (UPS),pressuring the S&P 500 index, after the package delivery company reported an earnings forecast for its third quarter below Wall Street's estimates.
The latest M&A deal involved Ericsson AB , the Swedish telecommunications equipment maker, which offered to buy Redback Networks Inc., a networking equipment vendor, for $2.1 billion in cash.
The offer came after about $100 billion of proposed deals had been announced this week worldwide.
"There have been a lot of takeovers and with Redback today, it's adding to the excitement," said Steve Goldman, a market strategist with Weeden & Co. in Greenwich, Connecticut. But he added that what had been broad-based gains were narrowing as investors concentrate on large multinational names whose profits will hold up better amid the slowing economy.
The dollar weakened this week, lifting shares of 3M Co. (MMM) and General Electric Co. (GE)Wednesday. Blue chips benefit with the anemic dollar as it usually stimulates overseas sales. The U.S. currency has dropped nearly 2 percent against the euro since the last week of November.
The Dow Jones industrial average dipped 7.45 points, or 0.06 percent, to 12,463.87, while the Standard & Poor's 500 Index edged down 2.02 points, or 0.14 percent, to 1,423.53. The Nasdaq Composite Index fell 1.94 points, or 0.08 percent, to close at 2,427.61.
The Dow hit a record of 12,498.47 in intraday trading Wednesday, after closing Tuesday at its 21st record high since the start of October.
GE rose 0.4 percent, or 14 cents, to $38.15 and 3M was up 0.9 percent, or 72 cents, to $78.83 on the New York Stock Exchange. These stocks were amomg the Dow's major gainers and helped limit its decline. GE ranked No. 3 among the S&P 500's top advancers and helped curb its loss for the day.
Exxon Mobil Corp. fell 1.2 percent, or 92 cents, to $76.08 on the NYSE and was the biggest drag on both the Dow and the S&P 500 as investors locked in profits following a strong session a day earlier.
Traders said already light volume on Wednesday will wane even further as the week progresses and more market participants start their holiday weekend.
The Dow Jones Transportation Average fell 1.1 percent. The DJT average was hurt not only by FedEx's decline, but was also bogged down by a drop of 1.3 percent, or 98 cents, in United Parcel Service Inc. shares to $74.77, and by a loss of 3.7 percent, or $1.87, to $49.28 in the shares of railroad Norfolk Southern Corp.. Norfolk Southern's stock fell after a senior executive said the company's intermodal and automotive businesses faced a challenging fourth quarter.
Shares of Maxim Integrated Products Inc. rose 4.4 percent, or $1.32, to $31.52 and topped the Nasdaq 100's advancers. The chip maker said its founder and chief executive will retire on Jan. 1 for health reasons. Maxim is among the companies whose stock option grants and practices have been under federal investigation.
Trading was moderate on the New York Stock Exchange, where about 1.38 billion shares changed hands, below last year's daily average of 1.61 billion.
On the Nasdaq, about 1.79 billion shares were traded, slightly below last year's daily average of 1.80 billion.
Advancing shares beat decliners on the NYSE by a ratio of about 5 to 4, while on the Nasdaq, more than five stocks rose for every four that fell.