dow doesnt disappoint

Dow doesn't disappoint
But tech-heavy Nasdaq dips into the red as investors brace for more volatility ahead of next week's Fed meeting.
By Jessica Seid, CNNMoney.com staff writer
June 20, 2006: 4:37 PM EDT


NEW YORK (CNNMoney.com) - Blue chips snapped a two-day losing streak Tuesday after good news from Caterpillar helped overshadow inflation jitters on Wall Street, but the broader market couldn't hold early gains.

The Dow Jones industrial average (up 32.73 to 10,974.84, Charts) rose 0.3 percent, while the broader Standard & Poor's 500 index (down 0.02 to 1,240.12, Charts) was flat. The Nasdaq composite (down 3.36 to 2,107.06, Charts) was down nearly 0.2 percent.







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All three major markets posted solid gains in the early going after the latest reading of the housing market showed housing starts were stronger than expected in May, although building permits fell to the lowest rate since November 2003. But stocks lost ground late in the session as concerns over interest rates and inflation persisted.

More volatile trade is expected in the days ahead as investors await the Federal Reserve's latest statement on inflation and economic growth after its meeting next week, according to Scott Wren, senior equity strategist at A.G. Edwards & Sons.

"Between now and this Fed meeting I think the market is just going to be back and forth," Wren said. "As for the little bounce today, I don't know if it's really all that meaningful because in my mind anyway it's still all about the Fed."

Investors will also be closely watching the May reading on durable orders due Friday.

On the move
Among stocks in the Dow, 20 rose and 10 fell.

Among the Dow's top gainers was Caterpillar (up $1.04 to $70.99, Charts), which rose 1.5 percent after the heavy equipment maker reported strong dealer retail sales.

Kroger (up $1.01 to $20.47, Charts) jumped 5 percent after the supermarket chain posted a 4-percent rise in first-quarter profit, beating Wall Street expectations.

Shares of Target (down $0.06 to $49.04, Charts) zig-zagged after the retailer said it expects June sales at stores open at least a year to be at the upper end of a forecasted range.

J.P. Morgan upgraded discount retailer Costco (up $1.33 to $54.88, Charts) to "overweight" from "neutral," sending shares up 2.5 percent.

Soleil downgraded video rental company Netflix (down $0.94 to $27.08, Charts) to "hold" from "buy," sending shares down more than 3 percent.

Shares of Applied Materials (up $0.14 to $16.45, Charts) rose nearly 1 percent after Prudential Equity Group raised its rating to "overweight" from "neutral."

Standard & Poor's cut its ratings on General Motors (down $0.70 to $25.65, Charts) deeper into junk territory, sending shares of the Dow component down over 2 percent.

Apple (up $0.27 to $57.47, Charts) is in talks with major Hollywood studios to offer feature films on iTunes. Microsoft (up $0.01 to $22.56, Charts) is also reported to be in similar discussions, according to the Wall Street Journal.

And Warner Music Group (down $1.16 to $26.18, Charts) has signed a distribution deal with China Unicom Ltd., China's second-largest mobile phone operator, to sell its music over the wireless network.

Market breadth was negative. On the New York Stock Exchange, decliners edged out advancers on volume of 1.5 billion shares. On the Nasdaq, losers narrowly beat winners as 1.6 billion shares changed hands.

Treasury prices were lower, raising the yield on the benchmark 10-year note to 5.15 percent from 5.14 percent late Monday.

The dollar edged lower against the euro and the yen.

Oil prices gained 36 cents to settle the July contract at $69.34 a barrel on New York Mercantile Exchange.

COMEX gold for August delivery gained $8.10 to $580.50 an ounce.

Overseas, major markets closed mostly lower Monday in Asia, while major European ended higher.

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Related: Riding out the stock market storm.

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