Stocks cut gains while the Nasdaq
slipped into negative territory on Wednesday as oil prices rose
sharply, offsetting positive jobs data and efforts by U.S.
officials to boost liquidity in turbulent financial markets.
Bank shares trimmed some of their earlier gains and energy
companies' stocks rose as U.S. crude oil prices jumped more
than $2 per barrel, after falling for most of the morning and
closing sharply lower on Tuesday.
The spike in oil prices took some of the shine off an ADP
Employer Services' report that showed that U.S. private-sector
employers added 9,000 jobs in July, suprising economists who
had expected a fall in that number.
The report encouraged investors to bet the government's
more comprehensive labor market report due on Friday will paint
a brighter picture for the U.S. economy -- supporting shares of
consumer products companies such as General Electric Co (GE.N)
and Procter & Gamble Co (PG.N).
"The ADP was encouraging. If they're on the right track and
Friday's payroll number comes in better than expected, than
that would be very positive," said Bill Strazzullo, partner and
chief market strategist at Bell Curve Trading in Boston.
The Dow Jones industrial average (.DJI) rose 66.44 points,
or 0.58 percent, to 11,464.00, while the Standard & Poor's 500
Index (.SPX) added 5.96 points, or 0.47 percent, to 1,269.16.
But the Nasdaq Composite Index (.IXIC) slipped 11.89 points, or
0.51 percent, to 2,307.73.
Shares of Exxon Mobil Corp (XOM.N) gained 1.4 percent to
$82.05, driving the S&P 500 up.
Shares of financial companies were still supported by a
decision by the U.S. Federal Reserve and other central banks to
extend liquidity offerings to stressed banks and securities
firms. For details, see .
In addition, U.S. securities regulators extended through
August 12 an emergency rule aimed at curbing abusive short
selling in the stocks of Fannie Mae (FNM.N) and Freddie Mac
(FRE.N), as well as 17 other major financial firms.
The combination of both measures "shows that the Fed and
the SEC are really coming in trying to defend the stock market,
and financials in particular, and doing their best to calm
individual investors' fears that are out there still," said
Ryan Detrick, technical analyst at Schaeffer's Investment
Research in Cincinnati.
Bank of America's (BAC.N) shares rose 1.5 percent to $32.70
while Citigroup (C.N) climbed 1 percent to $18.62. Merrill
Lynch (MER.N) gained 0.3 percent to $26.33 even as investors
wondered whether the investment bank and brokerage has finished
cleaning its balance sheet after saying it will write down $5.7
billion related to credit losses and raise $8.55 billion by
selling new stock.
Shares of Fannie Mae (FNM.N) rose 3 percent to $11.95 on
the SEC's emergency extension of its short-sale rule as well as
on news that President George W. Bush had signed into law a
housing rescue plan passed by Congress, which includes a
government lifeline to the two housing finance companies.
Shares of Elan Corp (ELN.I)(ELN.N) plunged 39.8 percent to
$20.35 while Wyeth (WYE.N) dropped 12.6 percent to $39.46 after
a drug trial showed the risk of a potentially serious side
effect in a new Alzheimer's drug jointly developed by the
companies. Wyeth was the biggest drag on the S&P 500.
Garmin Ltd (GRMN.O) was the biggest drag on the Nasdaq as
its stock sank 19.1 percent to $36.48 after the maker of
personal navigation devices slashed its profit and revenues
forecasts for 2008.
(Additional reporting by Kristina Cooke; Editing by Jan