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Stocks mostly lower ahead of Fed policy statement
Stocks mostly fell Wednesday in late-morning trading ahead of a statement on interest rates from the Federal Reserve and a news conference by its chairman.
Also dampening the mood were fears about Greece’s slow progress in talks with bondholders about reducing the nation’s crushing debt load.
The Dow Jones industrial average was down 57 points, or 0.5 percent, to 12,618 as of noon EST. Airplane-maker Boeing Co. lost 1.7 percent, the most of the 30 companies in the Dow, after its 2012 earnings forecast fell far short of Wall Street’s expectations. The company’s fourth-quarter profit rose 20 percent on strong deliveries of commercial aircraft, but it expects cuts in defense spending to hurt it in the coming year.
The Standard & Poor’s 500 index fell 3 points, or 0.2 percent, to 1,312. Information technology was the only rising sector of the 10 categories in the S&P 500.
Tech stocks rose, bucking the wider market, after consumer electronics giant Apple Inc. reported a best-ever quarter driven by strong sales of iPhones and iPads.
Apple’s stock jumped 6.6 percent, helping lift the Nasdaq composite index 14 points, or 0.5 percent, to 2,800. The Nasdaq is up 7.5 percent this year, more than twice the gain for the Dow.
The declines follow a two-month surge that lifted the broad S&P 500 index by 13 percent since its recent low on Nov. 25. As fears recede about the European debt crisis, big-time investors such as hedge funds will be drawn back into the market, fueling more gains, said Joe Bell, senior equity strategist at Schaeffer’s Investment Research.
After such a strong rally, “we could see a … slight pullback or consolidation, but overall we’re bullish,” Mr. Bell said.
European markets mostly closed lower as Greece’s bondholders held a closed-door meeting to discuss whether they will continue to negotiate with the crisis-stricken nation.
Greece wants the investors, mostly banks and hedge funds, voluntarily to write off about half of its debt. Otherwise, Greece will be unable to obtain needed bailout cash and will default. That scenario could set off a financial crisis similar to the aftermath of Lehman Bros.’ failure in 2008.
Benchmark stock indexes in Italy and London closed a half-percent lower. Borrowing costs for Italy and France increased, a sign of traders’ fears that the debt crisis will spread. Adding to the gloom was a report that Britain’s economy shrank by 0.2 percent in the fourth quarter.
With Apple’s gains Wednesday, the Cupertino, Calif. electronics maker again surpassed Exxon Mobil Corp. as the company with the biggest market value. Apple said late Tuesday that it sold 37 million iPhones in its fiscal first quarter, the first period after the death of CEO and co-founder Steve Jobs. That was coupled with a big jump in iPad sales to 15.4 million and a more modest increase in Mac sales.
Apple’s net income leapt 118 percent from the similar quarter a year earlier. Revenue soared 73 percent. Both results blew the doors off Wall Street’s expectations.
Among the other companies making big moves after announcing earnings:
• US Airways Group Inc. jumped 14.1 percent, and Delta Air Lines Inc. rose 6.5 percent. Both carriers reported earnings that were far better than Wall Street analysts had expected. The airlines raised fares during the fourth quarter while keeping costs under control. Delta also cut its number of flights to keep pace with demand.
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