U.S. Stocks Turn Mixed As Oil Run Up To $66 A Barrel
NEW YORK (MarketWatch) -- U.S. stocks turned mixed on Thursday, as a sharp rise in crude oil prices weighed on the market, especially the technology sector, offsetting an earlier boost from a report showing fourth-quarter growth was unexpectedly revised higher.
Crude oil prices traded up more than 3% in intraday trading to above $66 a barrel amid continuing tensions between the UK and Iran, one of the world's largest oil producers.
The Dow Jones Industrial Average was recently up 12 points at 12,312, falling off an earlier high of 12,381.
The S&P 500 index was up 1.5 points at 1,418, while the Nasdaq Composite fell back 10 points to 2,406.
RF Micro Devices weighed on tech shares, falling 11% on heavy volume after the mobile phone parts supplier expects a sequential fall in first-quarter revenue, earnings and margins due to slower demand from an unnamed top-tier customer. Motorola recently issued a profit warning over handset sales.
Stocks earlier traded firmly higher following the unexpected upward revision to fourth-quarter gross domestic product. "There's a little bit of a boost from the GDP and a little bit of a need for stability," said Jay Susskind, director of trading at Ryan, Beck & Co.
Stocks rallied last week on hopes that the Federal Reserve is leaning closer to cutting interest rates should the economy weaken too much. But Fed Chairman Ben Bernanke on Wednesday said the central bank remained concerned about inflation, putting a damper on those hopes.
With fourth-quarter economic growth revised slightly higher Thursday, "the market understands that things aren't as good as was thought last week, but not as bad as was thought yesterday," Susskind said.
Money-managers were also eager to fill their portfolios before the end of the month, which marks the end of the first quarter. "Today's give an opportunity for end-of-quarter window-dressing, because tomorrow is loaded up with key economic data," Susskind said.
Among blue chips, Citigroup rose 1% after saying it planned to roughly double its China branch network in 2007. . And Boeing Co. gained 0.3% after Colombia's largest airline, Avianca SA, said it would buy 10 of Boeing's 787 Dreamliner aircraft. .
Intel was flat after saying it would make design changes to boost microchip performance, including adopting techniques from rival Advanced Micro Devices . AMD fell 2%.
Fourth-quarter GDP revised up
Stock futures had extended their gains after the Commerce Department said the economy grew at a 2.5% annual pace in the final three months of 2006, slightly faster than the previous estimate of 2.2%. Economists surveyed by MarketWatch were expecting the 2.2% estimate to be unrevised.
Even if backward looking, the report proved soothing for a market which has been rocked by concerns about waning economic growth amid a stumbling housing market and a meltdown in the subprime mortgage market.
In addition, seasonally-adjusted initial claims for unemployment fell by 10,000 to 308,000 in the latest week.
On Wednesday, stocks closed sharply lower after Federal Reserve Chairman Ben Bernanke reiterated concerns about inflation, disappointing investors hoping that weaker growth would soon push the Fed closer to cutting interest rates.
"Gentle Ben is no more," said Marc Pado, market strategist at Cantor Fitzgerald, in a note. "Fighting inflation is job #1 at the Fed.," Pado said. "Housing is the biggest threat to the economy. And, the Fed's hands are tied."
Other markets
Crude-oil futures continued to climb, with the May contract rising $1.78, or 2.8%, to $65.86 a barrel on the New York Mercantile Exchange, backing slightly off an intraday high of $66.16.
Britain asked the United Nation's Security Council Thursday to support a statement that would "deplore" Iran's actions and demand the immediate release of the British troops they have held captve since last week, according to a report from the Associated Press.
Meanwhile, Iran has suspended the release of the female British trooper that it had previously said would be released last-Wednesday or early-Thursday, the AP report said.
April gold futures fell $5.50 to $661.30 an ounce, as the dollar strengthened following the GDP revision, but bounced from an earlier low of $654.60.
Merger news
Of companies in focus, Bell Canada owner BCE jumped 5.2%. The company may receive Canada's largest-ever takeover bid from a group led by Kohlberg Kravis Roberts, according to report in the Globe and Mail newspaper. The bid could be worth over $25 billion.
In other merger news, U.S. Steel rose 2% after saying it was buying Lone Star Technologies for $2.1 billion, or $67.50 a share. The per-share bid represents a 39% premium to Wednesday's closing price. Lone Star jumped 37%.
Chip maker Altera rose 1.4% after a new share buyback plan was announced alongside a 4 cents a share dividend.
Broker A.G. Edwards rose 2.7% after reporting fourth-quarter earnings that topped expectations.
By Nick Godt