Stocks Shake Off European Worries
FOX Business: The Power to Prosper
The markets shook off worries about Europe's debt crisis, closing near the highs of the session after a report from the Federal Reserve showed the economy improving during the end of last year.
Today's Markets
The Dow Jones Industrial Average fell 13 points, or 0.1%, to 12449, the S&P 500 rose 0.4 point, or 0.03%, to 1292 and the Nasdaq Composite rose 8.3 points, or 0.31%, to 2711.
The broad S&P 500 index narrowly extended its winning streak to three days, while the Nasdaq rose for the fifth-straight day. The Dow, meanwhile, fell slightly, snapping a two-day winning streak and slipping from the highest level since late July.
The Federal Reserve said on Wednesday afternoon the economy improved at a "modest to moderate" pace in the final stretch of 2011 compared with a "slow to moderate" rate months earlier. The so-called Beige Book also showed strength in consumer spending and manufacturing, coupled with inflation pressure that it saw as largely in check.
However, market participants and economists mostly agreed the improvement wasn't vast enough to knock the central bank off of its highly-accommodative monetary policy regime. Indeed, another round of quantitative easing "appears as likely as ever," Paul Edelstein, director of financial economics at IHS Global Insight said in a research note following the report. "It will take stronger evidence to alter this view."
Disney (NYSE:DIS), Coca Cola (NYSE:KO) and Chevron (NYSE:CVX) were among the laggards of the blue chips, each falling more than 1%. Meanwhile, Bank of America (NYSE:BAC), Alcoa (NYSE:AA) and JPMorgan Chase (NYSE:JPM) were the best-performing Dow components.
Overall, financial issues performed the best on the day by far, while energy shares lagged far behind, tracking weak performance in energy futures.
Energy Prices Slide
The Energy Department said crude oil inventories jumped 4.96 million barrels last week, a much bigger build than the 1.1 million analysts forecast. Meanwhile, gasoline stocks were up 3.61 million barrels, also a wider increase than the 2.1 million analysts projected. Generally, higher-than-expected inventories push prices lower.
The benchmark crude oil contract traded in New York fell $1.37, or 1.3%, to $100.87 a barrel. Wholesale RBOB gasoline slipped 0.34% to $2.763.
European Concerns Linger
Traders also paid close attention to developments from Europe on the day.
Germany's economy, Europe's biggest, expanded at a pace of 3% last year, slower than the 3.7% pace it grew at the year prior, according to preliminary data from Federal Statistics Office. The country's economy also contracted by a quarter percent in the final quarter of 2011 as it struggled to counteract headwinds caused by the eurozone's debt crisis.
Indeed, the report "doesn't bode well" for the currency bloc's overall economy because Germany is such an important economic player there, Manoj Ladwa, a senior trader at ETX Capital told FOX Business in an interview.
Fitch Ratings also warned that if Italy is unable to make it through its debt crisis it could cause a "cataclysmic" break-down of the euro, Reuters reported, citing David Riley, the company's head of sovereign ratings. The ratings company also urged the European Central Bank to boost its purchases of beleaguered European sovereign debt, according to the report, a move that analysts say could help push borrowing costs down for countries like Italy and Spain on private credit markets.
In European bond markets, Germany held a successful auction of five-year paper a day ahead of offers by Italy and Spain. Italy's 10-year note is still yielding slightly more than 7%, lower than the prior day, but a level that could make it difficult to the country to cut its deficit and refinance its debt this year.
The euro dipped 0.55% to $1.2707, touching a 16-month low against the U.S. dollar, while the greenback rose 0.61% against a basket of six world currencies. European blue chips were down 0.37%.
In metals, gold rose $8.20, 0.5%, to $1,639 a troy ounce.
Corporate News
Hostess Brands, the maker of Twinkies and Wonder Bread, filed for Chapter 11 bankruptcy protection after previously emerging from bankruptcy just three years ago.
Supervalu (NYSE:SVU) unveiled a deeper fiscal third-quarter loss and slashed its guidance amid weaker-than-expected sales for the grocery store chain.
Foreign Markets
European blue chips were down 0.37%, the English FTSE 100 slid 0.45% to 5,671 and the German DAX fell 0.17% to 6,152.
In Asia, the Japanese Nikkei 225 climbed 0.3% to 8,448 and the Chinese Hang Seng rose 0.78% to 19,152.