US stocks closed mixed on Wednesday as gains in American Express and Caterpillar helped push the Dow Jones Industrial Average slightly higher, but the Standard & Poor's 500 index was weighed down by consumer stocks, including homebuilder PulteGroup, following a bigger-than-expected drop in housing starts.
The Dow edged up 4.69 points (0.05%) to 10,409.46. American Express was the measure's best performer with a gain of 75 cents (1.8%) to $42.34, extending the stock's climb after the credit-card company on Tuesday reported lower delinquencies and write-offs. Caterpillar was also strong, up 93 cents (1.5%) at $64.39.
However, Alcoa weighed on the Dow with a drop of 18 cents (1.6%) to $11.41. Wal-Mart Stores was also weak, down 66 cents (1.3%) to $50.98, after J Sainsbury, one of the UK supermarket competitors to Wal-Mart's Asda Group, reported slowing sales growth in the first quarter and warned it expects little or no short-term industry growth.
The Nasdaq Composite eked out a gain of 0.05 to 2,305.93. The Standard & Poor's 500 index fell 0.62 (0.06%) to 1,114.61. The measure's consumer sectors led its declines, with PulteGroup among the decliners after data showed US housing starts plunged by 10% to a seasonally adjusted annual rate of 593,000 in May, the month after the government ended its home-buyer tax credit program. Single-family housing starts slid by a whopping 17.2% to an annual rate of 468,000, the lowest level in a year. PulteGroup dropped 18 cents (1.8%) to $9.75.
Also hurting sentiment on Wednesday, euro-zone debt concerns flared again, with Spain the concerning country of the day. The yield spread on Spanish bonds over German bonds hit its highest level since the creation of the euro.
BP's American depositary shares climbed 45 cents (1.4%) to $31.85, after the oil giant said it won't issue further dividends this year and confirmed an agreement to set aside $20bn to help pay for claims as a result of the Gulf oil disaster. The announcement helped bring some clarity to investors who had wondered whether the company would continue paying the dividend and what BP's liabilities might be.
FedEx dropped $4.94 (6%) to $78.07. The shipping giant swung to a fiscal fourth-quarter profit, with shipping volume continuing to rebound from weak prior-year levels, but it disappointed investors with an earnings projection for the new year below analysts' estimates.
Sunoco climbed $2.03 (6.3%) to $34.27, after the energy company said it plans to break off its coal-producing unit, SunCoke Energy, from the company early next year to focus on its transportation fuel and oil processing business. Sunoco also said it expects its refining segment to report its first profitable quarter in more than a year in the current period.
International Game Technology fell $1.05 (5.4%) to $18.54, and Bally Technologies declined $2.34 (5.7%) to $38.48. A broker, saying that next year is "unlikely to be the year" for the slots industry, downgraded its view on the sector to cautious, and cut its stock-investment ratings on IGT and Bally's to sell from neutral.
Scotts Miracle-Gro dropped $2.54 (5.4%) to $44.73, after the maker of lawn and garden products trimmed back its revenue target and Chief Executive Jim Hagedorn said "it is appropriate to establish a tighter range around our outlook."
For Australian ADRs listed on the NYSE, BHP Billiton slipped 36 cents (0.53%) to US$67.47, Rio Tinto Plc weakened 37 cents (0.74%) to US$49.58, ResMed fell 63 cents (0.95%) to US$65.46, Telstra Corporation weakened 11 cents (0.8%) to US$13.65, Telecom Corporation of NZ dropped 4 cents (0.59%) to US$6.73 and Westpac shed 61 cents (0.6%) to US$101.73.
In economic news, the artificial housing market boost driven by government home-buyer tax credits has faded, killing builders' incentives to construct new homes in May. Meanwhile, US industrial production strengthens while US producer prices dip.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.26% and the five year yield was 2.04%.
European shares inched higher on Wednesday, lifted by gains in the insurance and drug sectors, but Spanish bank losses and a profit warning from Nokia kept sentiment in check.
After five consecutive sessions of gains, the Stoxx Europe 600 index took a breather on Wednesday, ending up just 0.1% at 254.47.
There were more signs that governments in Europe are acting to reduce deficits, with France outlining a plan to lift its retirement age to 62 from 60.
However, there were also reports that International Monetary Fund Managing Director Dominique Strauss-Kahn will meet with Spanish Prime Minister Jose Luis Rodrigo Zapatero on Friday in Madrid for talks on the economy.
A spokesperson at the IMF dismissed the idea that any rescue package is being planned, something the Spanish government also has repeatedly denied.
The major regional benchmarks, however, finished in positive territory. The German DAX index gained 0.3% to 6,190.91, the French CAC-40 index added 0.4% to 3,675.93 and the UK FTSE 100 index advanced 0.4% to 5,237.92.
Gains from insurance companies and drugmakers helped Europe finish in the green, with Axa shares up 1.9% and Roche shares up 1.2%.
Citing high-end competition, shifts to lower gross margin products and the recent depreciation of the euro, mobile phone giant Nokia, down 9%, cut its second-quarter margin and sales outlook in the devices segment. Microchip maker STMicroelectronics fell 3.7% after the news.
Also trading with sharp losses on Wednesday, Norway's Aker Solutions fell 6% after announcing the departure of CEO Simen Lieungh.
Autos slipped, with BMW shares down 2.1% and Daimler shares down 2.8%.
Volkswagen said 2010 will be a challenging year for the industry due to a difficult environment and fierce competition, although demand in key markets and exchange rate moves means its fiscal-year unit sales target of 6.3m vehicles and operating profit target of EUR1.9bn "will be significantly exceeded." The firm's preference shares inched 0.2% higher.
There were some notable advancers in the European oil and gas sector, with Royal Dutch Shell shares up 1.7% and Total shares up 1.2%.
On the FTSE 100, Rio Tinto climbed 7.50 pence (0.23%) to 3,339.00 pence and BHP Billiton increased 11.00 pence (0.57%) to 1,922.41 pence.
Asian stock markets ended Wednesday with solid gains as a rally on Wall Street and in the euro helped Japanese exporters, while buoyant commodity prices lifted resource shares.
Japan's Nikkei Stock Average rose 1.8% to 10,067.15, finishing above the 10,000-mark for the first time since May 20. Markets in China and Hong Kong were closed for the Dragon Boat Festival holiday.
New Zealand shares ended higher, tracking the rise on Wall Street overnight although profit-taking late in the session trimmed gains. The NZX-50 Index rose 0.7%, or 22.67 points, to 3,066.58.
Base metals on the London Metal Exchange ended mostly lower on weaker-than-expected US housing data and a faltering euro. Aluminium fell $15 (0.74%) to $2,005 while copper weakened $30 (0.45%) to $6,660 and nickel dropped $350 (1.72%) to $19,950. Zinc shed $35 (1.90%) to $1,810 and lead rose $5 (0.28%) to $1,760. Comex copper was last quoted at 298.50 US cents per pound.
Gold futures fell modestly when equities recovered from early weakness, taking away some of the near-term safe-haven buying. However, worries about European sovereign debt persist, and as a result investors were still said to be buying gold on any price pullbacks. Spot gold was last quoted at $1,230.10. Comex gold futures slid $3.90 (0.32%) to $1,230.50. Spot silver was last quoted at $18.40.
Crude rose after a government report showed US gasoline demand last week hit a 10-month high amid rising confidence in the consistency of the economic recovery. West Texas Intermediate was last quoted at US$77.67 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8129 euros, 91.38 yen, 1.230 AUD and 67.93 pence.