Stocks turn mixed late Wednesday morning as investors weighed volatile
oil prices, a weaker dollar and economic reports that showed improved
factory orders and worse private sector employment.
The Dow Jones industrial average and the broader Standard & Poor's
500 index both added a few points over 90 minutes into the session. The
tech-heavy Nasdaq composite lost 0.4%.
Stocks mustered gains Tuesday - with the Dow and Nasdaq recovering
after falling to bear market levels during the session - after GM
reported a June sales loss that was steep, but not as large as had been
expected. Stocks managed gains early Wednesday.
Oil prices volatile after report: U.S. light crude for August delivery
rose 33 cents to $141.30 a barrel on the New York Mercantile Exchange
after ending the previous session at an all-time closing high. Prices
are already up 50% this year in response to tight supply and tensions
in the Middle East.
Prices were choppy after the government said that crude supplies
dropped by 2 million barrels last week, topping forecasts for a drop of
1.2 million barrel. Gasoline stocks rose by 2.1 million barrels,
beating forecasts for a drop of 500,000 barrel. Distillates, used in
heating oil, rose by 1.3 million barrels versus forecasts for a rise of
2.4 million barrels.
Economic news: Factory orders rose 0.6% in May, after rising a revised
1.1% in April, the government reported. That was above economists'
forecasts for a rise of 0.5%, but was the weakest showing since
February, reflecting weaker demand for autos, heavy machinery and
steel.
Private sector employment slumped in June, with employers cutting
79,000 jobs from their payrolls after adding a revised 25,000 in May,
according to payroll services firm ADP. Economists expected employers
to cut 20,000 jobs, on average.
Corporate news: Dow component General Motors slipped 6% Wednesday
morning after Merrill Lynch downgraded it to "underperform" from "buy"
and cut the automaker's price target to $7 per share from $28 per
share. On Tuesday, GM said June U.S. sales fell 18%, versus forecasts
for a drop of 25%.
Microsoft has approached other media companies about the possibility
of partnering to buy Yahoo’s search business. News Corp. and
CNNMoney.com parent Time Warner were among the companies approached,
the paper said. In May, Microsoft abandoned its $47.4 billion bid for
Yahoo.
In other news, Starbucks said late Tuesday that it will close 600
stores, or 8.5% of its 7,100 stores, expanding an initial plan to close
100 stores. The coffee chain has been struggling amid the weak economy.
Shares tiptoed higher. Other markets: In currency trading, the dollar
fell versus the euro and the yen.
In the bond market, Treasury prices rose, lowering the yield on the
benchmark 10-year note to 3.97% from 4.00% late Tuesday. Bond prices
and yields move in opposite directions.