US Stocks Waffle As Libya Uncertainty Reigns

March 9, 2011, 1:46 p.m. EST
US Stocks Waffle As Libya Uncertainty Reigns 
By Kristina Peterson
NEW YORK (MarketWatch) -- U.S. stocks wobbled between small gains and losses on Wednesday as uncertainty over the balance of power in Libya kept the U.S. market searching for direction on the two-year anniversary of the bull market's start.

The Dow Jones Industrial Average edged up 19 points, or 0.2%, to 12234 in recent trading. Leading the gains, International Business Machines rose 2.9%, while Home Depot added 1.5%. Keeping the gains in check, Chevron fell 1.1%, while DuPont slipped 1.1%.

The Nasdaq Composite fell 0.5% to 2752. The Standard & Poor's 500-stock index slipped 0.1% to 1321.

Two years after the S&P 500 hit its lowest close of the bear market at 677 on March 9, 2009, the index 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.

Earlier this year, the S&P 500 doubled its level from the March 2009 lows, but it has pulled back recently in the wake of unrest in the Middle East and North Africa. 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 fighting in Libya, where forces loyal to Col. Moammar Gadhafi seized the central square of a rebel-held city near the capital.

Investors predicted the market would trade sideways in the absence of any significant data or development overseas.

"We'll see this up-and-down motion until the Middle East situation calms down one way or the other," said Dick Del Bello, senior partner at Conifer Group. "The improvement in the jobs picture is actually overshadowed by the unrest in the Middle East and the potential for oil prices to rise," he said. "I think we are going to waffle here for a while."

Stocks pared earlier losses after U.S. wholesale inventories rose a greater-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.

The U.S. dollar weakened against both the euro and the yen. The euro was trading recently at $1.3906, little changed from its level late Tuesday in New York. In a bond auction, Portugal sold the maximum intended EUR1 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 climbed 5.8% after its fourth-quarter earnings rose 47%, beating its revised estimate, as cost cuts offset lower sales. The teen-apparel retailer also confirmed it is looking for a new chief executive.

Drugstore chain Walgreen added 0.2% after agreeing to sell its pharmacy-benefit-management unit to Catalyst Health Solutions for $525 million. Shares of Catalyst Health surged 16%.

U.S.-listed shares of Nokia rose 0.9% after the Finnish cellphone 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.

Fiber-optic equipment maker Finisar tumbled 36% after its fiscal third-quarter earnings more than tripled, but it offered a weak forecast for the current quarter.

Boston Beer fell 3.9% after its fourth-quarter earnings fell short of analysts' expectations and the brewer gave a downbeat earnings projection for the year.

Demand for U.S. Treasurys rose, pushing the yield on the 10-year note down to 3.48%. Gold futures climbed.