Strong Alcoa earnings boost Dow
Stocks closed mixed Tuesday as strong earnings from Alcoa Inc. led the Dow Jones industrials slightly higher but the Nasdaq gave up early gains as rising oil prices renewed worries about inflation and recession.
Solid earnings and outlooks from a handful of companies helped the Dow, which rose after aluminum maker Alcoa reported higher profits despite rising energy costs and lower prices for aluminum. But the gains narrowed in afternoon trading as broader indexes fell and oil prices climbed.
Traders continue to look anxiously for signs that higher energy costs will depress corporate earnings and oil prices stoked that nervousness. A barrel of light crude settled at $63.53, up $1.73, in trading on the New York Mercantile Exchange.
The markets’ behavior is typical of an aging bull market, and this bull market, now in its fourth year, is aging, said Charles H. Blood Jr., senior financial markets analyst at Brown Brothers Harriman & Co.
“Things are just more erratic, they take longer, they’re not as decisive,” he said.
The Dow rose 14.41, or 0.14 percent, to 10,253.17. The Dow lost 276.36 points, or 2.62 percent, last week, and fell another 53 points Monday.
Broader stock indicators were slightly lower. The Standard & Poor’s 500 index fell 2.46, or 0.21 percent, to 1,184.87, and the Nasdaq composite index fell 17.83, or 0.86 percent, to 2,061.09.
Bonds also fell, with the yield on the 10-year Treasury note at 4.39 percent, up from 4.37 percent late Friday. The Treasuries market was closed Monday for the Columbus Day holiday. The U.S. dollar was mixed against other major currencies in European trading. Gold prices were higher.
“We have decent economic growth, but the Fed’s tightening,” Blood said. “Earnings should be good, but rising interest rates are putting a little bit of pressure on valuation. All that nets out to a higher market, but not every day and every week.”
Alcoa rose 19 cents to $22.85 after it said its profits, released after the close of trading Monday, were 2 percent higher than a year ago, despite surging energy costs and lower aluminum prices. The company saw additional income in the fiscal third quarter after selling some railroad assets and has also been eliminating jobs to offset rising costs.
The Russell 2000 index of smaller companies fell 7.89, or 1.24 percent, to 630.08.
Overseas, Japan’s Nikkei stock average had a stellar day, rising 2.49 percent. Japan’s lower house of parliament approved privatization of the country’s $3 trillion postal system, paving way to create world’s biggest bank. The nation’s postal service also handles insurance and savings deposits.
Britain’s FTSE 100 rose 0.12 percent, Germany’s DAX index rose 0.19 percent, and France’s CAC-40 gained 0.30 percent.