NEW YORK – Stocks rebounded from the previous session's massive losses Wednesday as upvbeat results from Hewlett-Packard (HPQ) and plummeting oil prices offset a faster-than-expected rise in July producer prices.
The Dow Jones industrial average (search) rose 37.26 points, or 0.35 percent, to end at 10,550.71. The Standard & Poor's 500 Index (search) inched up just 0.90 of a point, or 0.07 percent, to finish at 1,220.24. The technology-laced Nasdaq Composite Index (search) advanced 8.09 points, or 0.38 percent, to close at 2,145.15.
"The markets are recovering from yesterday's nasty sell-off," said Michael Sheldon, chief market strategist at Spencer Clarke LLC, a New York brokerage. "We're starting to see a recovery in stock prices. Right now, most sectors in the S&P 500 are rising, although only technology right now is posting a gain of more than 1 percent."
The gains were not broad-based, with Hewlett-Packard accounting for two-thirds of the Dow's increase. Analysts warned that the balance between advancers and decliners suggests that the bounce-back following Tuesday's drop could be short lived.
"If tomorrow we get another rally attempt and the breadth again fails to kick in, then I would get more negative," said Elliot Spar, market strategist at Ryan Beck & Co.
Light, sweet crude for September delivery dropped $2.83 to settle at $63.25 a barrel on the New York Mercantile Exchange (search), well below the all-time high of $67.10 reached Friday. High oil prices concern investors because they drive up many corporate costs and eat into consumer discretionary spending.
The Labor Department (search) reported that its Producer Price Index (search), which measures price pressures before they reach the consumer, jumped by 1 percent in July, the biggest advance since a 1.5 percent increase last October. Rising "impact costs," including the costs of raw materials and energy, are affecting companies' earnings, said Jeanne L. Mockard, a senior portfolio manager at Putnam Investments.
The Labor Department said that the core rate of inflation, excluding energy and food, rose by a worrisome 0.4 percent in July, the biggest increase since January. Investors are leery about rising energy prices, especially after Wal-Mart Stores Inc. said Tuesday its customers were spending less because gasoline was costing them more.
The inflation number took forecasters by surprise, said Rod Smyth, chief investment strategist at Wachovia Securities. "I think the settled reaction of markets is not to get too worried about it and I think, broadly, that is right. If you look at the bond market, bond yields are up slightly, but there has not been a violent reaction."
The government reported Monday that the average nationwide price for gasoline rose to $2.55 per gallon in its latest survey, up 18 cents per gallon in just one week. And on Wednesday, the
Department of Energy (search) said that over the past four weeks, motor gasoline demand has averaged nearly 9.5 million barrels a day, 1.5 percent above year-ago levels.
Some of the biggest decliners for the day were oil companies, one of the few sectors usually hurt by declining crude prices.
Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, fell 1.5 percent, or 89 cents, to $58.18. ConocoPhillips slipped 3.7 percent, or $2.38, to $61.70, and Chevron Corp. slipped 1.4 percent, or 85 cents, to $59.64.
Hewlett-Packard Co. (HPQ) rose $3.12 to $26.82 after its fiscal third-quarter results surpassed Wall Street expectations, though a one-time tax adjustment led to a sharp decrease in the computer maker's earnings. In the first full quarter under CEO Mark Hurd, the company reported higher sales in all its major businesses — computers, printers and services. The company, which reported after the close of regular trading Tuesday, also predicted the momentum would continue in the current quarter as a corporate restructuring continues.
After the closing bell, shares of Network Appliance Inc. (NTAP) climbed 3.4 percent to $25.36 on the Inet electronic brokerage network after the data storage equipment maker reported a profit, but gave quarterly and full-year earnings outlooks that beat Wall Street expectations. It closed at $24.52 on Nasdaq.
But Salesforce.com Inc. (CRM) shares fell 10 percent after the bell to $20 after the maker of Web-based sales and customer service software reported a profit, but gave a forecast for the rest of the year at the low end of Wall Street's expectations. It closed at $22.20 on the NYSE.
Shares of Apple (AAPL), which makes the Macintosh personal computer and the iPod digital music players, rose 2 percent, or 90 cents, to $47.15. Network hardware maker Cisco Systems Inc. (CSCO) gained 1.2 percent, or 21 cents, to $17.84. Both trade on Nasdaq.
DaimlerChrysler AG (DCX) fell 49 cents to $50.17 after German regulators said they have opened a formal investigation into possible insider trading of the company's stock. Germany's financial-services watchdog, BaFin, ran a routine check after DaimlerChrysler's stock jumped just before last month's announcement that Chief Executive Juergen Schrempp would resign.
Boeing Co. (BA) rose 75 cents to $67.02 after UPS Inc. said it ordered eight Boeing 747-400 freighter planes to "accommodate strong international volume growth," particularly in Asia. Terms of the deal were not disclosed. UPS also said it selected General Electric Co. to supply engines for the new aircraft. United Parcel Service rose 17 cents to $72.31; General Electric rose 22 cents to $34.10.
Nordstrom Inc. (JWN) rose $3.18 to $34.30 after its second-quarter earnings beat Wall Street's expectations and the upscale retailer boosted its profit outlook for the year. Net income for the second quarter was $148.9 million, or 53 cents per share, up from $106.9 million, or 37 cents a share, for the comparable period last year.
Trading was active on the Big Board, with 1.42 billion shares changing hands on the New York Stock Exchange, just below the 1.46 billion daily average for last year. The pace was more moderate on the Nasdaq, where about 1.57 billion shares were traded, below the 1.81 billion daily average last year.
On the New York Stock Exchange, the number of shares declining in value exceeded those advancing by a ratio of 6 to 5. On Nasdaq, advancers exceeded decliners by 1,549 to 1,461.
The Russell 2000 index of smaller companies rose 0.21, or 0.03 percent, to 654.82.
Overseas, Japan's Nikkei stock average fell 0.35 percent. Britain's FTSE 100 closed down 0.56 percent, Germany's DAX index was down 0.25 percent, and France's CAC-40 was down 0.11 percent.
Reuters and the Associated Press contributed to this report.