Stocks lack direction on bull-market anniversary

March 9, 2011, 1:15 p.m. EST
Stocks lack direction on bull-market anniversary 
NEW YORK (Market Snapshot) -- U.S. stocks wobbled between slim losses and gains on Wednesday as uncertainty over the balance of power in Libya kept the U.S. market searching for direction on the anniversary of the bull market’s start.

The Dow Jones Industrial Average (DJIA 12,213, -1.21, -0.0099%)   edged up 12 points, or 0.1%, to 12,226.

Leading the gains, International Business Machines (IBM 165.86, +3.58, +2.21%)  rose 2.9%, while Wal-Mart Stores, Inc. (WMT 52.68, +0.61, +1.16%)   added 1.3%. Keeping the gains in check, DuPont (DD 53.69, -0.57, -1.05%)  fell 1.7%, while Caterpillar, Inc. (CAT 102.35, -1.78, -1.71%)   slipped 0.9%.

The Nasdaq Composite (COMP 2,752, -14.05, -0.51%)  fell 0.4% to 2756. The Standard & Poor’s 500-stock index (SPX 1,320, -1.81, -0.14%)  slipped 0.1% to 1321, with materials off the most and utilities gaining.
Two years after the index hit its lowest close of the bear market at 677 on March 9, 2009, the S&P 500 has surged more than 95% as of Tuesday’s close. That is the strongest two-year bull market since 1962, and one that added $6.2 trillion in market capitalization to the S&P 500, according to Birinyi Associates.

Investors cautioned against reading the two-year climb solely as a response to a gradually improving economy.

“The market overly priced in the end of the world and the end of the world didn’t happen,” said Stephen Wood, chief market strategist at Russell Investments. “It’s not just a 100% response to improving fundamentals.”

Earlier this year, the S&P 500 (SPX 1,320, -1.81, -0.14%)  doubled its level from the March 2009 lows, but has pulled back recently in the wake of unrest in the Middle East and North Africa. Read B. of. A. Merrill’s warning of recession if oil gets too high.

On Wednesday, prices for crude oil retreated slightly, falling below $105 a barrel as an increase in U.S. oil stockpiles briefly turned traders’ attention from the Middle East unrest. Read more on oil futures.

Still, with no resolution in sight for the tensions in Libya between leader Col. Moammar Gadhafi and rebel forces, “oil could be higher for a long time now,” cautioned Uri Landesman, president of Platinum Management. Read more on what’s happening with Mideast stocks, Libyan fighting.

Bull market hits second birthday
How far the markets have come since March 9, 2009, the day many consider to be the markets' bottom.

However, the market has largely managed to shrug off some “significantly bad news” recently, he noted. “The fundamentals are pretty strong -- in economic data, two out of every three data points are positive.”

Stocks pared earlier losses after U.S. wholesale inventories rose a more-than-expected 1.1% to a seasonally adjusted $436.88 billion in January, its highest level since November 2008. Economists had predicted a 0.9% increase. Meanwhile, sales rose 3.4%, boosted by sales of cars and petroleum. Read more on wholesale inventories.

The U.S. dollar weakened against both the euro (EURUSD 1.3907, +0.0001, +0.0072%)  and the yen (USDYEN 82.6600, +0.0200, +0.0242%)  . The euro was trading recently at $1.3966, little changed from its level late Tuesday in New York. In a bond auction, Portugal sold the maximum intended €1 billion ($1.39 billion) of debt, but had to pay a high yield that did little to reduce expectations that the country will end up asking for a bailout.

Among stocks in focus, American Eagle Outfitters (AEO 15.58, +0.78, +5.27%)  shares climbed 5.5% after the teen-apparel retailer’s fourth-quarter earnings rose 47%, beating its revised estimate, as cost cuts offset lower sales. Read more on retail stocks.

Walgreen Co. (WAG 42.59, +0.20, +0.47%)   shares added 0.5% the drug-store chain agreed to sell its pharmacy benefit management unit to Catalyst Health Solutions Inc. (CHSI 52.80, +8.27, +18.57%)  for $525 million. Shares of Catalyst Health surged 16%.

U.S.-listed shares of Nokia Corp. (NOK 8.61, +0.10, +1.18%)  rose 0.8% after the Finnish cell-phone giant said it will continue selling handsets that use its own Symbian operating system for as long as it is profitable to do so. Bernstein also upgraded the company to “market perform” from “underperform” late Tuesday.

Finisar (FNSR 24.61, -15.43, -38.54%)   shares tumbled 36% after the fiber-optic equipment maker’s fiscal third-quarter earnings more than tripled, but it offered a weak forecast for the current quarter. Read more on the optical networkers’ stocks.

Boston Beer (SAM 89.90, -4.11, -4.37%)   shares fell 4.1% after the brewer’s fourth-quarter earnings fell short of analysts’ expectations and the brewer gave a downbeat earnings projection for the year.

Boeing Co. (BA 72.10, +0.06, +0.08%)  shares edged up 0.2% after completing a deal to sell eight airliners to OAO Aeroflot for $2 billion. Read more on Boeing, Airbus

Demand for U.S. Treasurys rose, pushing the yield on the 10-year note (UST10Y 3.47, -0.07, -2.06%)  down to 3.54%. Gold futures climbed.