By Jonathan Cheng, MarketWatch
NEW YORK (MarketWatch) — U.S. stocks stumbled Wednesday as investors mulled the likelihood and impact of a potential move by the Federal Reserve, though energy stocks benefited from a surprise drop in oil inventories.
The Dow Jones Industrial Average (DJIA 10,817, -41.55, -0.38%) fell 43 points, or 0.4%, to 10,815, while the Standard & Poor’s 500-stock index (SPX 1,143, -5.18, -0.45%) shed 6 points to 1142 and the Nasdaq Composite (COMP 2,371, -8.78, -0.37%) edged down 10 points to 2370.
Among the blue-chip index’s leading declines was Cisco Systems Inc. (CSCO 21.67, -0.20, -0.89%) , off 1%, after International Business Machines (IBM 134.97, +0.08, +0.06%) purchased a maker of Ethernet switches, putting the two tech giants in more direct competition. IBM shares inched up 0.04%.
Offsetting Cisco’s losses was Hewlett-Packard Co. (HPQ 42.23, +0.61, +1.46%) , which led Dow gainers with a 1.5% rise, after the company said revenue for the fiscal year would be between $131.5 billion and $133.5 billion, a range that compared favorably with the consensus forecast of $131.6 billion.
Taken together, tech stocks were a source of relative strength for the market, together with energy stocks, which benefited from a weekly government report showing oil inventories dropping. Read more on tech stocks.
Financial stocks were the weakest, weighed down by a 1.3% drop at J.P. Morgan Chase (JPM 38.46, -0.49, -1.26%) and a 0.8% slip at Bank of America Corp. (BAC 13.19, -0.08, -0.60%) .
“Policy analysts and the Fed are saying we’ve already taken interest rates to zero, we’ve already done this massive quantitative easing, and it really didn’t help the broad economy -- it helped big companies, financial companies and the stock market, but it did very little for the broad economy,” said Ben Halliburton, chief investment officer at Tradition Capital Management. Given the Fed’s internal reassessment of the first wave of quantitative easing, he added: “I don’t think it’s a foregone conclusion that quantitative easing will happen.”
U.S. stocks had ended higher on Tuesday, as takeover deals and hopes for more Treasury buying by the Fed helped offset worries over weak consumer-confidence data. The Dow finished up 46 points after reversed an 80-point slide earlier in the session.
Speculation about more monetary easing in the U.S. has pushed the dollar lower in recent days. The U.S. Dollar Index (DXY 78.78, -0.24, -0.30%) , which measures the greenback against a basket of six currencies, hit its lowest level in eight months Wednesday morning, while the dollar sank to a two-week low against the yen before bouncing back up to trade at 83.69 yen recently. The move continued the dollar’s slide back toward the level it hit two weeks ago, just before Japanese authorities intervened in currency markets.
Concerns about the euro zone’s sovereign-debt problems, meantime, kept a lid on the euro’s gains. The euro (EURUSD 1.3619, +0.0042, +0.3094%) edged up against the dollar, trading at $1.3591 after the European Commission proposed legislation that would strengthen its control over the economic policies of EU member states, including fines for breaching budget rules.
Treasurys were modestly higher, with the yield on the benchmark 10-year note (UST10Y 2.47, +0.00, +0.08%) remaining below the 2.50% market, at 2.47%.
Gold futures hit another high as the dollar weakened, with the yellow metal edging above $1,310 an ounce. Read more on gold prices.
On the corporate front, shares of Green Mountain Coffee Roasters (GMCR 30.69, -6.32, -17.08%) fell 16% after the firm said the Securities and Exchange Commission was investigating its revenue-recognition practices.
Oil giant BP Plc. (BP 39.77, +0.48, +1.23%) was also back in the headlines as incoming Chief Executive Officer Bob Dudley said he will restructure BP’s upstream business and create a new safety division, with the power to audit any part of the company’ operations. BP shares rose 1.1%. Read more on BP’s management shake-up.
Family Dollar Stores (FDO 44.63, +1.29, +2.98%) rose 2.6% after the discounter topped the consensus earnings forecast and announced plans to buy back up to $750 million of its shares. Read more on Family Dollar.
In international markets, the Stoxx Europe 600 (ST:SXXP 260.60, -1.76, -0.67%) index was off 0.7% in recent trading. The Nikkei 225 Average (JP:NI225 9,559, +63.62, +0.67%) closed up 0.7%, while the Hong Kong market added 1.2%
