FOX Business: The Power to Prosper
The blue chips ended on the fence, while the Nasdaq slumped, after sliding technology stocks and a bigger-than-expected increase in wholesale inflation weighed on traders' confidence.
The Dow Jones Industrial Average rose 4.3 points, or 0.04%, to 11,410, the S&P 500 rose 1.1 points, or 0.09%, to 1,194 and the Nasdaq Composite fell 12 points, or 0.47%, to 2,511. The FOX 50 edged higher by 1.9 points to 861.
Hewlett Packard (NYSE:HPQ) was the biggest drag on the Dow after Dell (NASDAQ:DELL), the country's second-biggest computer maker, sliced its full-year revenue outlook to 1% to 5% from 5% to 10%. HP is set to report its quarterly earnings after the bell on Thursday.
Other big-name technology players like Cisco (NASDAQ:CSCO) and Intel (NASDAQ:INTC) were under pressure too, making the technology-heavy Nasdaq the worst-performing major stock market index of the day. Industrials like Caterpillar (NYSE:CAT) struggled on the day as well, while financials like American Express (NYSE:AXP) eked out gains.
U.S. Economy to Take the Spotlight
The economy is also expected to come into focus throughout the rest of the week, with inflation reports and the weekly jobless claims report on tap for the next two days.
Producer prices increased by 0.2% in July, a quicker pace than the 0.1% economists forecast. Excluding the food and energy component, so-called core prices rose 0.4%, a bigger gain than the 0.2% Wall Street expected. The increase in core inflation was the largest since January.
Monetary policy makers pay close attention to inflation, particularly inflation expectations, in crafting policy. Generally, expansionary monetary policies like the Federal Reserve has embarked on help spur economic growth, but may lead to high levels of inflation.
"The Fed will be watching core inflation very closely," Nigel Gault, chief U.S. economist at IHS Global Insight, wrote in a research note. "If it fails to come down or eases only very slightly that will make it less willing to implement more stimulus."
A more closely-watched report on prices at the consumer level is slated for release on Thursday.
In yet another sign of concerns over the escalating euro zone sovereign debt crisis, analysts at JPMorgan recommended in a research note that clients utilize so-called put options on euro spreads, which would gain in value if the euro decreases. The broader markets, the analysts noted, tend to move in the same direction as the euro, meaning the strategy could be used to insulate portfolios from volatile moves in the euro.
On Tuesday, the leaders of Germany and France met to discuss the crisis, but failed to provide specific steps market participants expected to stem the crisis.
Energy Benefits From Weak Dollar, Mixed Inventory Report
Energy markets settled modestly higher amid a weak dollar and a mixed inventory report. Meanwhile, in currencies, the euro gained 0.25% against the U.S. dollar, while the greenback slipped 0.31% against a basket of world currencies.
Crude stocks jumped 4.2 million barrels last week, a much bigger build than the 600,000 analysts forecast. However, gasoline inventories fell 3.5 million barrels, compared with expectations of a 1.2 million-barrel decline. Generally reductions in inventories pushes commodity-future prices higher.
Light, sweet crude climbed 93 cents, or 1.1%, to $87.58 a barrel. Wholesale RBOB gasoline rose 2 cents, or 0.58%, to $2.87 a gallon.
Gold settled at yet another record high. gaining $8.80, or 0.49%, to $1,794 a troy once. The precious metal has benefited significantly from the market turmoil as investors have sought the shelter of the safe-haven asset.
Prices at the pump ticked lower overnight, but remain elevated as compared to last year. A gallon of regular costs $3.58 on average nationwide, down from $3.68 last month, but well higher than the $2.74 drivers paid last year.
Target (NYSE:TGT) posted second-quarter earnings of $1.03 a share, topping estimates of 97 cents. The retail giant also says it expects full-year earnings in the range of $4.15 to $4.30 a share, better than Wall Street's estimates of $4.12. Share jumped on the results.
BJ's Wholesale Club (NYSE:BJ) unveiled quarterly profits of 85 cents a share that zipped by consensus estimates of 77 cents.
Deere (NYSE:DE) also revealed quarterly profits that beat analysts' expectations. The world's largest farm-equipment maker said it earned $1.69 in its fiscal-third quarter, besting the Street by two cents a share.
The English FTSE 100 slipped 0.49% to 5,332, the French CAC 40 gained 0.73% to 3,254 and the German DAX slumped 0.77% to 5,949.
In Asia, the Japanese Nikkei 225 fell 0.55% to 6,057 and the Chinese Hang Seng rose 0.38% to 20,289.