Stocks mixed in midafternoon trading

Stocks mixed in midafternoon trading

	Published : Wed, 31 Jan 2007 20:26 By : Agencies Print this Story

NEW YORK (AFX) - Stocks were narrowly mixed Wednesday after the economy gave off fresh signs it could sidestep a sharp slowdown and quarterly results from Boeing Co. blew past projections. The robust data offset some skittishness about the Federal Reserve's decision on interest rates due shortly.

While Wall Street expects the Fed will leave short-term interest rates unchanged for the fifth straight meeting, investors are wrestling with their hopes that the economy will continue to grow but somehow still allow the inflation-wary central bank to lower rates. The market will again be paying close attention not only to the Fed's decision on rates, but also its statement assessing the economy.

In recent months Wall Street has worried less that the economy will slow sharply and more recently that it will heat up again and prompt the Fed to raise rates. The gross domestic product report out Wednesday could underscore that notion. The Commerce Department found the economy grew at 3.5 percent in the fourth quarter as consumers increased spending despite a pullback in the housing market. Wall Street had been expecting an increase of 3 percent.

'The GDP number was a very good for both the stock and the bond markets because it showed better growth and less inflation,' said Stuart G. Hoffman, chief economist for PNC Financial Services Group in Pittsburgh.

In midafternoon trading, the Dow Jones industrial average was up 25.88, or 0.21 percent, at 12,549.19.

Broader stock indicators were mixed. The Standard & Poor's 500 index was up 0.03, or less than 0.01 percent, at 1,428.85 and the Nasdaq composite index was down 1.94, or 0.08 percent, at 2,446.70.

Bonds rose following the flurry of economic data, with the yield on the benchmark 10-year Treasury note falling to 4.86 percent from 4.88 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell 10 cents to $56.87 per barrel on the New York Mercantile Exchange.

Among the economic data helping move markets was a Commerce Department report that found spending in December on construction projects fell 0.4 percent after rising 0.01 percent in November.

Also, the National Association of Purchasing Manager's index of business conditions in Chicago fell to a 48.8 in January from 51.6 in December. A reading below 50 generally signals a pullback in the region's manufacturing; it was the first time the reading had fallen below 50 since April 2003. The Chicago number is often viewed as an indicator of how the nation's overall manufacturing sector might be holding up. That report is due Thursday.

Hoffman said the Wednesday's data represented a dichotomy for the economy. 'Manufacturing activity is still pretty weak, particularly for autos, whereas the service economy is still quite strong. The markets were whipsawed a little bit. First they see a stronger GDP number and then they get evidence that manufacturing is weaker.'

In other economic news, the cost of hiring and retaining workers moderated in the fourth quarter, possibly easing some concern about wage inflation. Wages and benefits rose 0.8 percent in the fourth quarter, down from a 1 percent increase in the third quarter, the Labor Department reported.

'The stock and bond markets respond positively to low inflation and low or stable interest rates. Good news on both is sort of an elixir for both the stock and bond markets,' Hoffman said.

In corporate news, Boeing rose $3.48, or 4.1 percent, to $89.48, giving a lift to the Dow industrials. The aerospace company's fourth-quarter profit more than doubled amid broad strength in its commercial airplane and defense system businesses. Revenue climbed 26 percent to $17.5 billion, coming in well ahead of Wall Street's forecast.

SanDisk Corp., which makes flash memory products, fell $2.92 , or 6.8 percent, to $39.91 after it posted a fourth-quarter loss amid big charges related to its acquisition of Israeli flash memory maker M-Systems.

Time Warner Inc. slipped 26 cents to $21.89. The company's fourth-quarter profit jumped 34 percent, aided by the sale of Internet access businesses in Europe and an agreement that brought new subscribers to its cable TV unit.

Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume came to 837.2 million shares.

The Russell 2000 index of smaller companies was down 2.63, or 0.33 percent, at 795.34.

Overseas, Japan's Nikkei stock average closed down 0.61 percent. Britain's FTSE 100 closed down 0.62 percent, Germany's DAX index finished up 0.01 percent, and France's CAC-40 was down 0.66 percent.