Stocks End Lower After Pop Above 9,900
Published: Wednesday, 23 Sep 2009 | 4:02 PM ET By: CNBC.com
Stocks ended lower Wednesday after being up for much of the day as the dolllar retreated and the Fed delivered one of its most optimistic statements in years.
The Dow Jones Industrial Average shed more than 80 points, or 0.8 percent, to close around 9,750, after briefly passing the 9,900 mark for the first time since last fall. The S&P 500 lost 1.0 percent and Nasdaq dropped 0,7 percent.
Major U.S. Indexes
.DJIA 9748.55 -81.32 -0.83%
Volume 921,794,000
.NCOMP
2131.42 -14.8801 -0.69%
0
.SPX
1060.87 -10.79 -1.01%
Volume 4,378,140,800
The Fed, as expected, left interest rates at historically low levels. Policy makers said economic activity has "picked up"— an improvement from the "leveling out" language from its last statement — and conditions in the financial markets have improved. They also said housing activity has increased and household spending is stabilizing.
The Fed also said it was slowing its purchases of mortgage debt in order to extend the program through the end of March and smooth the transition in the markets.
This came after stocks closed at fresh 2009 highs in the prior session as the dollar weakened.
This morning, the dollar fell to a fresh one-year low against the euro and other currencies.
The Treasury auctioned $40 billion of five-year notes that fetched a yield of 2.47 percent. Demand was weak, with a bid-to-cover ratio of 2.40, This came after strong demand for the two-year auction on Tuesday. The seven-year auction is tomorrow.
Ford [F 7.36 0.35 (+4.99%) ] shares jumped after the automaker offered an upbeat outlook: CEO Alan Mulally said the auto industry is recovering and he expects sales to rise over the next two years. The U.S. market is "looking good," Mulally said, but added that the company is looking to Asia to juice sales.
Also on the positive side, mortgage applications jumped 12.8 percent last week to their highest level since late May. Interest in home-buying increased as mortgage rates fell below 5 percent.
On the earnings front, General Mills [GIS 63.87 2.90 (+4.76%) ] beat earnings expectations, helped by strong sales in the U.S. and lower commodity costs, and raised its full-year forecast. Its shares advanced.
AutoZone [AZO 141.50 -11.42 (-7.47%) ] shares fell after the auto-parts chain missed its earnings target amid a calendar shift and as customers shifted toward lower-margin products.
Bank of America [BAC 17.50 -0.11 (-0.62%) ] and Citigroup [C 4.52 -0.13 (-2.8%) ] advanced, while many other banks were in the red. Bank of America and JPMorgan Chase [JPM 45.00 -1.47 (-3.16%) ] are among banks that have agreed to overhaul overdraft fees, just as lawmakers prepare to implement sweeping credit card changes.
Seagate Technology [STX 15.48 -0.20 (-1.28%) ] gained after Deutsche Bank upgraded the stock to "buy," based on expectations for better demand and higher margins at the small-cap computer disk maker.
And Palm [PALM 16.96 -0.11 (-0.64%) ] shares climbed after the company said it expects to raise $313.1 million from a sale of shares at $16.25 each, a 5 percent discount to Tuesday's closing price. Palm shares had been up about 15 percent over the past several days amid talks of a possible takeover bid as traders scurried to cover short positions.
Microsoft [MSFT 25.71 -0.06 (-0.23%) ] shares advanced amid news that the software giant is reportedly developing a tablet-style PC, according to widely followed technology blog Gizmodo.
Life insurers got a downgrade from Morgan Stanley to "in line" from "attractive." Prudential Financial [PRU 49.30 -2.72 (-5.23%) ] and Union Group [UNM 21.56 -0.90 (-4.01%) ] both declined after Morgan cut its ratings on the stocks.
AMR [AMR 7.78 -0.66 (-7.82%) ] skidded after the parent of American Airlines sold $250 million in convertible senior notes due in 2014.
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