Wall Street: Wednesday open

13 April 2012

US STOCKS drifted lower on Wednesday after two sessions of gains, thanks in part to the decision by OPEC, the oil cartel, to cut production.

The market was also spooked by rumours, later denied, that Federal Reserve chairman Alan Greenspan had had a heart attack.

The Fed officially denied the rumour only after the dollar began drifting on world currency markets.

Sentiment on Wall Street was also hit by weaker-than-expected economic data that derailed hopes for a third-straight daily and fourth-straight quarterly gain.

Figures showed orders for US-made factory goods up just 0.3% in February, compared with the 1.7% increase expected by many analysts. The dented sentiment offset some strong corporate results.

The Dow Jones Industrial Average dropped 53 points in early trading to 10,328 while the S&P 500 index lost 5 points, or 0.4%, to 1,122.

OPEC‘s decision to cut crude oil production by 1m barrels a day prompted the White House to declare that it was 'concerned' about rising gas prices.

Elsewhere, several companies beat analyst expectations to provide above-forecast results, including Best Buy. Its fourth-quarter earnings were at the top end of forecasts and this boosted the share price 5.5% to $51.10. Sabre Holdings was another gainer, as was Circuit City, up 6.3% to $11.37. It announced the acquisition of Canadian retail business InternTAN.

Technology stocks gained in early trading. ATI Technologies was strongly ahead, while mobile telephony giant Nokia jumped 1.7% to $20.3. Nortel was up 1.8% to $6.29.

QLogic shares dropped sharply, falling 20% to $33.8 in the wake of new guidance to analysts that indicated a forthcoming drop in quarterly earnings due to a fall in anticipated demand from major customers.

Looking ahead, analysts said the rising price of oil and other commodities may boost energy and raw materials company stocks but they could act as a drag on most others thanks to the prospect of higher energy costs.

Ozan Akcin, chief market strategist at Puglisi and Co said he could see major potential for anyone trading on oil futures: 'A lot of investors see oil as a big play,' he added.

Oil futures are trading near 13-year highs as OPEC forges ahead with tighter oil supply curbs beginning in April. A fire at a large BP oil refinery in Texas threatened to push gasoline prices still higher.

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