US blue-chip stocks eked out a tiny gain on Wednesday after the Federal Reserve kept interest rates at record lows, supporting a rise in JP Morgan Chase, but energy companies Chevron and Exxon slid as oil-prices fell.
The Dow Jones Industrial Average edged up 4.92 points (0.05%) to 10,298.4, paring an early jump after the Fed's statement prompted the euro to strengthen.
The Federal Reserve's policy-making body kept key interest rates near zero, as expected, but cast its policy statement with more downbeat language, compared with its previous statement in late April. Still, Fed officials continued to say they expect to keep the benchmark federal-funds rate low for an "extended period."
Investors said weak home sales, lingering unemployment and low inflation combined to persuade the Fed to signal that rates will stay low for some time.
The Standard & Poor's 500-share index slid 3.27 (0.30%) to 1,092.04. The Nasdaq Composite fell 7.57 (0.33%) to 2,254.23.
The Dow's components did little to shuffle their order throughout the day. Boeing and JP Morgan Chase rose to the top of the measure early and did not cede their ground after the Fed statement. Boeing closed up $1.17 (1.8%) to $67.45, while JP Morgan gained 56 cents (1.5%) to $38.89.
Meanwhile energy companies slid as crude-oil prices tumbled nearly 2%. Chevron slid $1.74 (2.4%) to $72.26. Exxon Mobil lost 84 cents (1.4%) to $61.10.
Offshore drilling stocks also slumped after US Interior Secretary Ken Salazar told lawmakers he would take a look at issuing a new, scaled-back moratorium in the "weeks and months ahead." Rowan fell 81 cents (3.3%) to $23.61, while Pride International slipped 65 cents (2.7%) to $23.36 and Noble fell 64 cents (2.1%) to $29.45.
Graphics-software company Adobe slid $2.38 (7.3%) to $30.38, after its fiscal second-quarter profit climbed 18% as the company benefited from strong sales of its flagship Creative Suite 5 product. But the midpoint of fiscal third-quarter earnings guidance was merely in line with Street expectations. In addition, worries over its margins and concerns about Adobe's feud with Apple about Flash continued to weigh on shares.
Electronics-component maker Jabil Circuit jumped $1.44 (11%) to $15.03, after swinging to a fiscal third-quarter profit on double-digit sales growth and higher margins, and the company predicted a record fiscal year. Jabil's third-quarter earnings topped its guidance, and it predicted fourth-quarter earnings and revenue above analysts' estimates.
Auto dealer CarMax climbed $1.85 (9.3%) to $21.85, after its fiscal first-quarter profit nearly quadrupled on an improvement at its financing operations as used-vehicle sales climbed. Carmax's earnings beat analysts' expectations. Separately, Standard & Poor's said that CarMax will replace XTO Energy in the S&P 500-stock index after the close of trading on Friday.
Philip Morris International gained $1.50 (3.3%) to $46.49, after the cigarette giant raised its 2010 earnings-growth projection excluding currency changes due to improving business trends, particularly in Japan, and the reversal of some tax provisions. But the recently volatile foreign-exchangemarket will cut more out of overall profit than previously anticipated.
Film studio DreamWorks Animation rose 48 cents (1.7%) to $28.88, after saying it plans to make a feature film starring Good Luck Troll dolls, one of the biggest toy crazes of the 1960s, which later had a resurgence in the 1990s. Separately, a broker raised its stock-investment rating on DreamWorks Animation to buy from hold, saying the shares are oversold. The broker added the Street may be too pessimistic on the 2010 film properties and diversification of revenue streams is building and will be more visible in the second half of the year.
For Australian ADRs listed on the NYSE, BHP Billiton increased $1.45 (2.13%) to US$69.61, Rio Tinto Plc improved $1.16 (2.33%) to US$51.05, ResMed declined $1.33 (2.1%) to US$61.95, Telstra Corporation firmed 19 cents (1.35%) to US$14.26, Telecom Corporation of NZ added 18 cents (2.69%) to US$6.87 and Westpac slid $1.55 (1.54%) to US$99.07.
In economic news, Federal Reserve officials downgraded their outlook for the US economy, indicating short-term interest rates could remain at a record low near zero% until next year to support growth.
New-home sales plunged to a record low, dropping 32.7% to an annual rate of 300,000 in May, as buyers faced a lacklustre job market without a longtime government subsidy for purchases. Economists expected sales to drop by 20.6%.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.12% and the five year yield was 1.92%.
European shares ended lower on Wednesday, declining for the second straight day, with financials under pressure.
The Stoxx Europe 600 index lost 0.84% to end at 254.77. The index slipped 0.5% on Tuesday, snapping a nine-session winning streak.
Disappointing US home sales prompted concern about the economic backdrop and as worries about bank balance sheets in Europe also weighed.
A report out on Wednesday didn't help, showing that the rate of growth in the manufacturing sector in the 16-nation euro zone slowed to a four-month low in June.
Financials, leveraged to economic growth, were lower with insurance company Allianz down 1.6% and BNP Paribas shares down 2.2%.
Of the regional benchmarks, the UK FTSE 100 index lost 1.3% to 5,178.52, the German DAX index declined 1% to 6,204.52 and the French CAC-40 index fell 1.7% to 3,641.79.
There was a bit of deal news for investors in Europe, with BASF shares up 0.2% after it agreed to buy Cognis Holding in a deal with an enterprise value of EUR3.1bn.
Most oil and gas firms were lower with Royal Dutch Shell shares down 2% and Total shares down 2% after a judge ruled against an Obama administration moratorium on deepwater drilling - a decision the market interpreted as spurring protracted legal battles ahead.
On the FTSE 100, Rio Tinto slipped 55.00 pence (1.6%) to 3,383.22 pence and BHP Billiton weakened 37.00 pence (1.86%) to 1,973.52 pence.
Asian markets mostly fell after a drop in US existing home sales hurt sentiment, with softer commodity prices dragging on material stocks while Chinese steelmakers were hurt by Beijing's decision to scrap an export tax rebate.
Japan's Nikkei Stock Average fell 1.9%, China's Shanghai Composite gave up 0.7% and Hong Kong's Hang Seng Index rose 0.2%.
New Zealand shares closed flat offsetting early losses as some recently battered stocks including bellwether Telecom Corp. partially recovered lost ground. The NZX-50 Index closed unchanged at 3,054.29, after falling to 3,044.13 in the morning.
Base metals on the London Metal Exchange ended mostly lower on record low US new home sales data and a weaker euro. Aluminium fell $18 (0.89%) to $1,940 while copper weakened $55 (0.83%) to $6,550 and nickel dropped $480 (2.43%) to $19,310. Zinc rose $30 (1.67%) to $1,825 and lead shed $10 (0.55%) to $1,810. Comex copper was last quoted at 294.30 US cents per pound.
Gold futures fell as appetite for perceived riskier assets dwindled after disappointing US home sales data and on skittishness ahead of the results of the Federal Reserve meeting. Spot gold was last quoted at $1,236.60. Comex gold futures slid $6.00 (0.48%) to $1,234.80. Spot silver was last quoted at $18.45.
Crude oil prices fell on fresh worries over the pace of US economic recovery and lingering concerns over high oil stockpiles in the world's biggest energy consumer. West Texas Intermediate was last quoted at US$75.85 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.8123 euros, 89.91 yen, 1.145 AUD and 66.86 pence.