Bombings at three hotels in Jordan erased most of an afternoon rally Wednesday on Wall Street, leaving stocks with only marginal gains as fears about terrorism resurfaced.
The day ended with stocks such as Google and Marvel Entertainment down sharply. Before the bombings, stocks had advanced modestly as investors hoping for a fourth-quarter rally did their best to create one.
Investors had spent the morning worrying about consumer spending after PepsiCo reduced its year-end forecast and said it would restructure. Traders were already concerned about spending after high-end home builder Toll Bros. cut its 2006 forecast Tuesday.
A pullback by PepsiCo's much broader customer base is even more worrisome, although PepsiCo shares ended the day unchanged at $58.30.
The morning's declines triggered short-covering and program buying. Stocks were also boosted by portfolio churn as managers took profits where they could and moved into other equities.
The Dow Jones industrial average rose 6.49 points, or 0.06%, to 10,546.21.
Broader stock indicators also closed slightly higher. The Standard & Poor's 500 index rose 2.06 points, or 0.17%, to 1,220.65, and the Nasdaq composite index rose 3.74 points, or 0.17%, to 2,175.81.
Yields on U.S. Treasury notes surged as demand from international investors, who own about half of all U.S. government debt, declined at the Treasury's auction of five-year notes. Bond yields rise as their prices fall.
Bidders including foreign central banks bought 21.1% of the $13 billion in five-year notes, down from 45.8% last month, the Treasury said. The government's last debt sale this week is a $13-billion offering of 10-year notes today.
"The foreign bid was a disappointment," said Alan De Rose, a trader and Treasury market strategist at CIBC World Markets in New York, one of the 22 primary U.S. government securities dealers that are obligated to bid at the auctions. "There will be plenty of pressure on the market" because of the results of the auction, he said.
The yield on the benchmark 10-year note rose to 4.64% from $4.56% on Tuesday.
Crude oil futures fell. A barrel of light crude was quoted at $58.93, down 78 cents, in New York trading.
Stocks remain nearly flat for the year, and strategists are split between those who think a fourth-quarter rally is almost certain and those who recommend investors shift capital away from stocks and toward cash and bonds.
