The stock market struggled to find a direction today despite the Federal Reserve's 11th interest rate cut of the year and a bullish forecast from Nokia. Stocks mixed despite
rate cut, Nokia forecastBy Lisa Singhania
Associated PressTech stocks managed a small gain, but the broader market fell back after a disappointing outlook from Merck late in the session. Analysts said the Fed's action, while welcome, was widely expected and not enough to inspire sustained buying. They said Merck's warning remind investors that companies, and in turn, the market, must still contend with uncertainty about the economy.
The Dow Jones industrial average closed down 33.08 at 9,888.37. It was the fourth straight drop for the index, which had risen as much as 93 points on news of the Fed cut.
The Standard & Poor's 500 index lost 3.17 to 1,136.76. The technology-focused Nasdaq composite index rose 9.81 to 2,001.93. Decliners beat advancers on the New York Stock Exchange, with 1,565 down, 1,561 up and 220 unchanged. Volume was 1.35 billion shares. The NYSE composite index fell 2.14 to 576.11, the American Stock Exchange composite index lost 1.11 to 818.11 and the Russell 2000 index gained 0.58 to 474.76.
The Treasury's 2-year note rose 18 to 100 132; its yield fell 7 basis points to 2.98 percent. The 10-year note gained 932 to 99 1732; its yield fell 4 basis points to 5.06 percent. The 30-year bond rose 632 to 97 1832; its yield fell 1 basis point to 5.54 percent.
The market's good feeling and solid gains after the rate cut dissipated with Merck's forecast of no growth in earnings per share next year, mainly due to expiration of the patent on its key ulcer drug, Prilosec.
"Merck gave everyone an excuse to pull their bids," said Todd Clark, co-head of trading at WR Hambrecht. "You're also getting a little bit of 'sell on the news' reaction to the Fed rate cut after initial euphoria. This wasn't a surprise, so there was nothing to react to."
The central bank did indicate it saw some signs of "preliminary and tentative" stabilization, but said it remained focus on the risk of more economic problems.
"I think the market was reassured by the fact the Fed indicated they might continue to cut ... and at the same time hinted that stabilization might be at hand," said Barry Hyman, chief investment strategist at Ehrenkrantz King Nussbaum.
Tech stocks fared a little better because of an upbeat forecast from Nokia. The world's biggest cell phone maker rose $1.71 to $25.50 after saying it expects sales to rise 20 percent during the fourth quarter. It is the latest technology company to forecast stabilizing or improving business. Last week, Cisco and Oracle made similar announcements. Other tech stocks showed strength, including IBM, which gained $1.84 to $121.50.
After the market closed, Procter & Gamble, the nation's largest maker of household goods, said it expects sales and earnings growth for its fiscal second quarter to be at the upper end of estimates. The company's earnings per share will be 2 cents to 3 cents more than estimates, it said.