Wall Street Takes Breather After Sharp Rally

FOX Business: The Power to Prosper

After spending much of the day locked into a tight range, the markets closed modestly lower on Wednesday as traders considered what would come next after the blue chips posted the best rally so far this year in the prior session.

Today's Markets

The Dow Jones Industrial Average fell 15.4 points, or 0.12%, to 12,572, the S&P 500 dipped 0.89 point, or 0.07%, to 1,326, and the Nasdaq Composite slipped 12.3 points, or 0.43%, to 2,814. The FOX 50 rose 0.52 point to 940.

Market participants received disappointing housing data on the day, however, largely rosy earnings helped temper the blow.  Meanwhile, traders were also keeping track of the debt-ceiling negotiations ongoing in Washington, D.C.

Existing home sales fell 0.8% in June to an annualized unit rate of 4.77 million, according to the National Association of Realtors.  The reading was the lowest in seven months.  Wall Street had been expecting a gain of 2.9% for the month.  The housing sector has been under pressure from still-tough mortgage market conditions and high supply of homes on the market.

The homebuilding sector received good news on Tuesday when new housing starts and permits both came in considerably higher than expectations.

Market participants were keeping a close eye on second-quarter earnings, which have largely been seen as optimistic.

Apple (NASDAQ:AAPL) revealed that it had a blockbuster fiscal third-quarter after the closing bell on Tuesday.  The technology giant earned a whopping $7.3 billion, or $7.79 a share, more than doubling its earnings from a year ago on sales of $28.6 billion.  The company benefited from considerably better-than-expected iPad and iPhone sales.

Several members of the Dow reported second-quarter earnings on Wednesday, with United Technologies reporting before the opening bell, and American Express (NYSE:AXP) and Intel (NASDAQ:INTC) reporting after trading closed for the day.

United Technologies (NYSE:UTX) unveiled profits of $1.3 billion, $1.45 a share, topping analysts expectations of $1.41 a share. The world's biggest maker of elevators also boosted its full-year outlook to $5.35 to $5.45 from $5.25 to $5.40.

American Express (NYSE:ATX) earned $1.07 a share on continuing operations with sales of $7.6 billion.  Wall Street expected the credit card company to post profits of 99 cents on $7.4 billion in revenue.

Intel (NASDAQ:INTC) revealed operating income of 59 cents a share on $13.1 billion in sales.  Analysts forecast the chipmaker earn 51 cents on $12.8 billion in revenue.

Also on the corporate front, Ecolab (NYSE:ECL) announced plans to acquire Nalco Holdings for (NYSE:NLC) for roughly $5.4 billion. Billionaire investor Carl Icahn boosted his bid for Clorox (NYSE:CLX) to $80 a share from $76.50.

The "gang of six" U.S. senators pitched a deficit reduction plan to a broader group of lawmakers on Tuesday, also getting an endorsement from President Barack Obama.  The plan, which would decrease the deficit by roughly $3.8 trillion over the next decade, may also help to break an impasse in Washington over raising the debt limit, analysts say.

Concerns that the debt limit may not be raised by the Aug. 2 deadline provided by the Treasury Department weighed significantly on markets in recent weeks.

Energy markets seesawed following the weekly inventory report from the Energy Department. The greenback fell 0.52% against a basket of world currencies, while the euro gained 0.43% against the dollar.

Crude stocks fell 3.7 million barrels last week, a much bigger draw than the 1.7 million analysts expected.  However, gasoline inventories were up 757,000 barrels compared with forecasts of a 100,000 barrel draw.

Light, sweet crude gained 64 cents, or 0.66%, to $98.14 a barrel.  Wholesale RBOB gasoline climbed 3 cents, or 1%, to $3.15 a gallon.

Consumer gasoline prices continue ticking higher.  A gallon of regular gasoline at the pump costs $3.68 on average nationwide, up from $3.65 last month, and well higher than the $2.72 drivers paid last year, according to the AAA Fuel Gauge Report.

Gold fell $4.20, or 0.26%, to $1,597 a troy ounce.  Silver sunk 66 cents, or 1.7%, to $39.56 a troy ounce.

Corporate News

AMR (NYSE:AMR) announced plans to buy 460 single-aisle aircraft from Boeing (NYSE:BA) and Airbus. The parent company of American Airlines also unveiled a second-quarter net loss of $286 million, or 85 cents a share, for the third quarter on high energy costs and impacts of extreme weather.

PNC Financial Services Group (NYSE:PNC) posted profits of $1.67 a share on revenue of $3.6 billion.  Wall Street was anticipating  profits of $1.46 a share on $3.6 billion in revenue.

Ford (NYSE:F) recalled more than 20,000 Ranger compact pickup trucks due to an exterior lighting problem.

Foreign Markets 

The English FTSE 100 jumped 1.1% to 5,854, the French CAC 40 soared 1.6% to 3,755 and the German DAX edged higher by 0.4% to 7,221.

In Asia, the Japanese Nikkei 225 rose 1.2% to 10,006 and the Chinese Hang Seng tacked on 0.46% to 22,004.