NEW YORK (AP) — Stocks fluctuated between small gains and losses on Wednesday as corporate earnings news came in mixed and a potential federal default edged closer.
Yum Brands — the owner of KFC, Taco Bell and Pizza Hut — was the biggest decliner in the Standard & Poor's 500 index after its earnings fell short of Wall Street's expectations. The discount retailer Family Dollar also slumped after giving a cautious earnings forecast for next year.
The number of companies reporting third-quarter earnings is picking up this week, giving investors better insight into how corporate America is doing.
Stocks have slumped this week as few signs emerged that lawmakers in Washington were moving closer to reaching a deal to resolve a budget stalemate. The government reaches the limit of its borrowing authority next week, putting its ability to pay all its bills in jeopardy.
"It looks like there has been some disappointment in the early earnings already," said Colleen Supran, a principal at San Francisco-based Bingham, Osborn & Scarborough, an investment adviser and asset management company, while the situation in Washington "looks more concerning by the day."
The S&P 500 index was up three points, or 0.2 percent, to 1,658 as of 2:25 p.m. EDT. The index lost 2 percent in the first two days of this week as concerns grew that politicians will fail to reach a deal before the government hits its debt ceiling on Oct. 17.
The Dow Jones industrial average rose 48 points, or 0.3 percent, to 14,826. The Nasdaq composite fell 13 points, or 0.4 percent, to 3,681.
Stocks opened modestly higher as the White House prepared to nominate Janet Yellen for the top position at the Federal Reserve.
Investors expect Ms. Yellen, who currently serves as the Fed's vice chair, to continue the aggressive economic stimulus policies championed by Chairman Ben S. Bernanke. President Obama is scheduled to announce the appointment at the White House with Ms. Yellen and Mr. Bernanke at his side Wednesday.
Ms. Yellen's appointment "does add certainty, in the absence of certainty for stocks," said Jim Russell, a regional investment director at U.S. Bank. "It perhaps keeps a little bit of a safety net under equities for the near, or intermittent, term."
Investors got an insight into the Fed's thinking Wednesday after the central bank published minutes from its September meeting Wednesday.
Nearly every member of the Federal Reserve thought the central bank should see more economic data before slowing its bond purchases, but worries about whether a delay would confuse markets made the decision a close call.
The Fed surprised investors with its decision to keep buying $85 billion of bonds every month to bolster the economic recovery. Many had predicted the central bank would cut back on its stimulus.
Yum Brands slumped $5.91, or 8.3 percent, to $65.40. Sales in China have grown weaker, and the company cut its full-year earnings forecast after the closing bell Wednesday. Family Dollar fell $1.66, or 2.4 percent, to $67.83.
In government bond trading, the yield on the 10-year Treasury note rose to 2.65 percent from 2.63 percent.
In commodities trading, the price of oil dropped $2.14, or 2 percent, to $101.35 a barrel. Gold slumped $24.40, or 2 percent, to $1,300 an ounce.
Among other stocks making big moves:
• Jos. A. Bank Clothiers rose $3, or 7.2 percent, to $44.72 after saying it wants to buy rival retailer Men's Wearhouse for $2.3 billion. Men's Wearhouse soared $9.98, or 28 percent, to $45.22.
• Alcoa rose 31 cents, or 3.9 percent, to $8.25 after the aluminum maker posted a slim third-quarter profit late Wednesday, reversing a year-ago loss.