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bulls gain upper hand Bulls gain upper hand, for now
Stocks finish session on upbeat note, but more stormy sessions seen ahead; oil, gold sink.
By Grace Wong, CNNMoney.com staff writer
May 24, 2006: 4:15 PM EDT


NEW YORK (CNNMoney.com) - Stocks staged a late rally Wednesday, helping the major gauges finish the session in the black after a day of choppy trading.

The Dow Jones industrial average (up 34.19 to 11,132.54, Charts) gained 0.2 percent and the broader Standard & Poor's 500 index (up 1.94 to 1,258.52, Charts) ended barely higher, according to early tallies.





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The Nasdaq composite (up 10.41 to 2,169.17, Charts) added 0.5 percent.

Stocks bounced around the breakeven point all day Wednesday as investors took in mixed readings on the economy and sinking crude and gold prices. But in the final half hour of trading, the oversold market attracted new buyers.

U.S. light crude oil for July delivery sank $1.90 to settle at $69.86 a barrel on the New York Mercantile Exchange. The government's weekly inventory report showed supplies of gasoline rose more than expected.

COMEX gold fell $37.70 to $636 an ounce, dragging down metal shares.

Treasury prices were lower, raising the yield on the 10-year note to 5.04 percent, down from 5.03 percent late Tuesday.

Earlier in the session, the yield on the 10-year note fell as low as 4.99 percent, putting the closely watched benchmark below the key short-term rate set by the Federal Reserve in a situation known as an inverted yield curve, which some economists say is a warning sign of an economic downturn.

In currency trading, the dollar edged higher against the euro and rose versus the yen.

Here's a look at what was moving before the market close:

What moved?
Winners and losers were nearly evenly split on the Dow 30, with 16 components gaining.

General Motors (up $2.12 to $26.60, Research) was the biggest advancer. The stock soared 9 percent after Merrill Lynch upgraded its rating on the automaker to "buy" from "neutral," according to Briefing.com.

Oil shares dragged, with the Philadelphia Oil Service Sector (down $3.18 to $202.81, Research) index declining 1.5 percent.

Metal stocks also fell. The Amex Gold Bugs (down $12.76 to $312.03, Research) index tumbled nearly 4 percent.

Among other stock movers, shares of Vonage (down $2.22 to $14.78, Research), a pioneer in phone service over the Internet, sank 13 percent in its market debut. The company priced its IPO shares in the midpoint of its estimated range.

Borders Group (down $1.16 to $21.33, Research) fell more than 5 percent after reporting late Tuesday a wider-than-expected loss due to weak sales.

Payless Shoesource (up $3.88 to $24.76, Research) surged 18 percent after it said its profit rose in the first-quarter from the same period a year ago.

Dreamworks Animation (up $1.65 to $27.24, Research) also rose after Soleil Securities raised its rating on the film studio to "buy" from "hold," according to Briefing.com.

Market breadth was negative. On the New York Stock Exchange, decliners beat advancers by a margin of three to two on volume of 2.25 billion shares. On the Nasdaq, losers topped winners by a margin of eight to seven as 2.64 billion shares changed hands.

Economic data mixed
"Investors are trying to get a picture of what the Fed's next move might be," said Eugene Peroni, senior managing director at Claymore Advisors.

The government reported Wednesday durable goods orders -- big ticket items meant to last three years or more years -- fell 4.8 percent in April, a much sharper drop than the 0.5 percent fall decline forecast by economists surveyed by Briefing.com. The decline marked the first slide in orders since January.

A report on housing, however, showed new home sales unexpectedly rose 4.9 percent in April, suggesting underlying strength in the real estate sector. But March's reading was sharply revised lower, making the month-over-month gain less significant.

"I think until we get a better idea of where the Fed is going, we're not likely to see any kind of discernible pattern [in the stock market]," Gus Faucher, director of macroeconomics at Moody's Economy.com, said.

The Fed has raised rates 16 straight times starting in June 2004 in a bid to contain inflation, and some investors and policy-makers are nervous the central bank could overshoot, pushing rates too high and hurting economic growth - and corporate earnings.

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