Stocks move higher as energy costs ease
NEW YORK » Stocks closed mixed yesterday as sagging energy prices and a strong advance by Honeywell International Inc. sent the Dow Jones industrials higher, but downgrades of Apple Computer Inc. dragged the tech-heavy Nasdaq composite lower.
The Dow got a lift from Honeywell, which rose by as much as 6.8 percent after it issued 2006 earnings guidance in line with Wall Street's expectations.
Pharmaceutical stocks also rose with Pfizer Inc., which announced a 26 percent dividend increase Monday, leading the way. Pfizer, as well as fellow Dow components Boeing Co. and American Express Inc., all rose by more than 1 percent yesterday.
"Big stocks are finally capturing some attention," said Philip S. Dow, managing director of equity strategy at RBC Dain Rauscher in Minneapolis.
A recent upward revision in the nation's gross domestic product, along with a positive outlook from General Electric Co. on Tuesday and Honeywell's guidance yesterday are "all things that say America has not lost its fastball," Dow said.
The Dow rose 59.79, or 0.55 percent, to 10,883.51.
Broader stock indicators were mixed. The Standard & Poor's 500 index rose 5.31, or 0.42 percent, to 1,272.74, hitting a four-year high. The Nasdaq fell 2.41, or 0.11 percent, to 2,262.59.
Bonds rose, with the yield on the 10-year Treasury note falling to 4.45 percent from 4.52 percent late Tuesday.
Crude oil futures, gasoline and natural gas prices all settled lower following a surprisingly strong inventory report from the Department of Energy. A barrel of light crude settled at $60.85, down 52 cents, in trading on the New York Mercantile Exchange.
Just how great an effect energy prices could have was evidenced by the trade deficit, which rose to an all-time high in October as oil shipments soared and the United States set deficit records with China, Europe, Canada and Mexico. So far this year, the trade deficit is running at an annual rate of $718 billion, far surpassing last year's $617.6 billion imbalance.
Hopes that the Federal Reserve's streak of interest rate hikes will soon end helped the mood on Wall Street. Tuesday's Federal Open Markets Committee meeting "was a watershed in the sense that it was the first time the Fed left the window open for a pause in this 18-month old tightening cycle," said David A. Rosenberg, Merrill Lynch's North American Economist, in a research note yesterday.
In company news, both Banc of America and Bear Stearns downgraded Apple Computer, with Banc of America saying the 50 percent run-up in the stock's price over the past six weeks has made it hard to justify more buying.