Stock prices were mixed Wednesday after the Federal Reserve reported that eight of the 12 districts reported that economic conditions have improved since mid-October.
The Dow Jones industrial average — up 125 points on Tuesday — fell 18.90 points to 10,452.68. The Nasdaq composite index gained 9.22 points to 2185.03 and the S&P 500 stock index rose 0.38 points to 1,109.24.
A private survey reported that the number of announced layoffs by U.S. companies fell in November to the lowest level since December 2007. Thursday the Labor Department will report on weekly initial claims for jobless benefits and the November employment data will be released on Friday.
Oil prices fell Wednesday after the Energy Department reported that oil inventories rose by 2.1 million barrels in the past week, a sign of lower consumption. Crude closed at $76.60 a barrel, down $1.77. And, gold rose to another record high, up $12.90 to $1,212 an ounce.
The nine-month, 64 percent rally in the S&P 500 has pushed valuations to about 22 times its companies’ reported operating earnings, the most expensive level since 2002, according to data compiled by Bloomberg. Analysts expect full-year earnings in the measure to drop 11 percent on average before rebounding 22 percent in 2010, estimates compiled by Bloomberg show.
The benchmark index for U.S. equities may climb to 1,250 by the end of next year as earnings continue to beat forecasts, UBS AG (NYSE: UBS) strategists said.
“Large-cap, dividend paying, globally oriented stocks offer good risk/reward,” strategists including Thomas Doerflinger wrote in a report dated Wednesday.
Verizon (NYSE: VZ) added 1 percent to $32.65. AT&T Inc. (NYSE: T), the largest U.S. phone company, agreed to drop its lawsuit to stop a Verizon Wireless advertising campaign that AT&T said unfairly depicts its mobile-phone network coverage.
Alcoa (NYSE: AA), the largest aluminum producer, jumped 6.6 percent to $13.64 as the metal climbed 2.6 percent to a more than one-year high of $2,157 a metric ton in London.
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) advanced 1.5 percent to $85.18. Gold rose to a record $1,218.40 an ounce as Goldman Sachs Group Inc. (NYSE: GS) boosted its 2010 forecast for the precious metal 14 percent to $1,099 an ounce. Copper climbed to a 14-month high, while zinc, lead and tin also advanced.
Bemis Co. (NYSE: BMS) rose 4.4 percent to $30.90, the highest since July 2007. The maker of flexible packaging materials was added to the “Top Picks Live” list at Citigroup Inc. (NYSE: C). Timothy Thein, the analyst, increased his per-share earnings estimates for 2009 and 2010 and his price forecast to $36 from $32, citing Bemis’s pending acquisition of Rio Tinto Plc’s (NYSE: RTP) food-packaging business.
CF Industries Holdings Inc. (NYSE: CF) rose 5.1 percent to $90.27. Agrium Inc. (NYSE: AGU) plans to nominate a slate of directors for CF’s board next year as it seeks to take over the operator of North America’s two largest nitrogen-fertilizer plants. Agrium added 5.5 percent to $60.11.
Ciena Corp. (Nasdaq: CIEN) climbed 4.9 percent to $12.88. Nokia Siemens Networks challenged Ciena’s bid for Nortel Networks Corp.’s (OTC: NRTLQ) optical-networking business and submitted a new bid of $810 million in cash for the assets.
U.S. airline shares rose after the sector was upgraded to “attractive” from “in-line” at Morgan Stanley (NYSE: MS), which said investors would be “hard-pressed to identify a better entry-point” in the coming months. Morgan Stanley raised its recommendation for AMR Corp. (NYSE: AMR), the parent of American airlines, and UAL Corp. (Nasdaq: UAUA), which owns United Airlines, to “overweight” from “equal weight.”
AMR increased 8 percent to $6.79. UAL jumped 12 percent to $9.29. Delta Air Lines Inc. (NYSE: DAL), the world’s largest airline, added 7.8 percent to $9.29
JPMorgan Chase & Co. (NYSE: JPM) lost 0.7 percent to $41.93, paring a slide of as much as 1.8 percent. A change in rules on derivatives trading may mean a reduction in earnings per share of as much as 20 cents in a “worst case” situation, Bernstein analyst John McDonald said in a research note after meeting with Steven Black, vice chairman of the investment bank. Derivatives accounted for about 8 percent of JPMorgan’s revenue from 2006 to 2008, he said.
U.S. Treasury Secretary Timothy Geithner said he sees a “good chance” that Congress will pass a financial regulatory overhaul bill this year, and he urged lawmakers to act quickly. A House panel approved legislation strengthening U.S. authority to police large, complex firms that pose risks to the economy, advancing the Obama administration’s effort to overhaul U.S. financial rules.
Bank of America Corp. (NYSE: BAC) lost 1.5 percent to $15.65, while Wells Fargo & Co. (NYSE: WFC) slid 1.9 percent to $27.45.
Bloomberg News contributed to this report.
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