A midsession rally proved short-lived after bond yields and crude futures ticked higher
Stocks finished lower in volatile trading Tuesday, following contradictory wholesale inflation data and a speech by Fed Chairman Ben Bernanke that left the door open to further interest-rate hikes. An intraday rally led by semiconductor stocks soon gave way to profit-taking, while bond yields and oil futures rose, says Standard & Poor's MarketScope.
The Dow Jones industrial average fell 39.06 points, or 0.35%, to 11,235.47, weighed down by Alcoa (AA ), Caterpillar (CAT ) and Disney (DIS ). The broader Standard & Poor's 500 index dipped 7.85 points, or 0.6%, to 1,297.23. The tech-heavy Nasdaq composite index stumbled 19.88 points, or 0.86%, to 2,294.23, despite strength in semiconductor stocks like Intel (INTC ) and Advanced Micro Devices (AMD ).
The late-session decline seemed technically driven, because rising bond yields didn't prevent the short-lived rally, says S&P MarketScope. High volume accompanied the losses on the Nasdaq.
The Fed chairman's remarks after Monday's close hung over investors Tuesday. Bernanke told the New York Economic Club that the Fed must watch various economic vital signs when determining interest rates. He did not specifically address the Fed's next interest-rate move.
A mixed wholesale inflation reading did little to quiet interest-rate worries. The producer price index dropped 1.4% in February, the largest decrease in nearly three years, while the core rate rose 0.3%.
Investors should get a bit of a reprieve on the economic front Wednesday, but the calendar picks up again Thursday with February existing home sales and weekly jobless claims numbers.
On the corporate side, General Motors (GM) supported the Dow, climbing about 5% amid hopes the automaker is close to a deal with former subsidiary Delphi and the United Auto Workers union.
In earnings news, software maker Oracle (ORCL ) was lower after the company's 8% sales increase fell below expectations. Shoemaker Nike (NKE ) also dipped before posting a 23% rise in third-quarter earnings after the close.
Technology-licensing company Rambus (RMBS) was higher after lifting its first-quarter revenue guidance from to between $45 million and $48 million. The previous forecast called for a range of $41 million to $43 million.
Outside of tech, retailer Target (TGT) slipped after narrowing its March sales forecast. The company reportedly said it expects same-store sales to rise 1.5% to 2.5%, compared to earlier guidance of 1% to 3%. Rival Wal-Mart (WMT ) was higher.
In legal action, Pepsi's (PEP ) Gatorade unit sued Coca-Cola (KO ) over an ad for rival Powerade sports drinks, claiming the ad was false and deceptive.
Elsewhere, Sirius Satellite Radio (SIRI ) was modestly higher after saying it reached deals with three major record labels over a portable music player. Competitor XM Satellite Radio (XMSR ) fell.
Among other companies in the news, software giant Microsoft (MSFT ) fell after an early rise on reports that it would increase the availability of its Xbox 360 video-game system. Production woes had made the consoles tough to find in stores.
In the energy markets Tuesday, April West Texas Intermediate crude oil futures closed up 15 cents at $60.57 a barrel, ahead of Wednesday's weekly inventory report expected to show an increase of 2.5 million barrels. May crude futures take the lead Wednesday.
European markets finished mixed. In London, the Financial Times-Stock Exchange 100 index fell 0.4 points, or 0.01%, to 5,991.3. Germany's DAX index rose 9.07 points, or 0.15%, to 5,911.86. In Paris, the CAC 40 index added 10.05 points, or 0.2%, to 5,148.56.
Asian markets finished lower. In Hong Kong, the Hang Seng index slipped 7.2 points, or 0.05%, to 15,922.75. Korea's Kospi index fell 10.04 points, or 0.75%, to 1,336.65. Japan's Nikkei 225 index was closed for a national holiday afer Monday rallying 285.07 points, or 1.74%, to 16,624.8.
Treasury yields rose on the inflation data, but pared gains slightly in afternoon trading. Prices for 10-year Treasury notes were lower at 98-09/32 with a yield of 4.71%, while 30-year bonds fell to 96-04/32 for a yield of 4.74%.