Wall Street closes higher as oil price drops

Wall Street stocks closed modestly higher on Wednesday as a retreat in crude oil futures lost steam and hopes that the imminent quarterly earnings season would help the market shake off its recent malaise.

By the close, the Dow Jones Industrial Average added 0.3 per cent to 10,484.69, while the S&P 550 index was up 0.2 per cent to 1,183.90. The Nasdaq Composite closed virtually unchanged at 1,999.

Crude oil prices fell below $55 per barrel earlier but settled above that level after reaching a record nominal high last week, as US stockpiles data showed a rise in crude reserves.

Marc Pado, US market strategist at Cantor Fitzgerald, said that the recent sell-off left Wall Street in a “no man’s land” from a technical standpoint as oil was likely to remain the main focus.

François Trahan, chief investment strategist at Bear Sterns, forecast a short-term rebound for US stocks but cautioned that the long-term trend of the market is downwards. “Until the Fed is done raising rates, investors should brace themselves for a lacklustre environment for equities,” he said.

Shares in Siebel Systems gave up 9.7 per cent to $8.26 after the software group warned of below-forecast sales in the first quarter, fanning concerns about demand in the sector.

However, shares in AutoDesk rose 3.8 per cent to $32.07 in afternoon trading after the maker of the popular AutoCAD design software raised its profit and revenue estimates.

Elsewhere in the sector, Microsoft rose 0.8 per cent to $24.67 despite news that several leading technology groups had joined the European Union’s anti-trust battle with Microsoft.

In merger news, MCI shares rose 0.4 per cent to $25.39 after it turned down a sweetened takeover bid from Qwest Communications in favour of an offer from Verizon Communications. The move raised the chances of a hostile bid from Qwest and lifted Verizon 0.4 per cent to $35.50. Qwest shares gave up 2.1 per cent to $3.78.

Meanwhile, shares in Research in Motion gave up 2 per cent to $72.92 after the company, best known for its BlackBerry handheld email devices, reported a quarterly loss.

Network Appliance shares rose 4.6 per cent to $28.45 following an announcement of a strategic alliance with IBM, whose shares eased 0.6 per cent to $89. The two companies aim to offer data storage services and technology to compete with EMC, whose stock eased 1.9 per cent to $12.29.

Also among technology shares, Dell Computer was 2.5 per cent lower at $38.15 ahead of its anticipated annual briefing to Wall Street analysts.

Anheuser-Busch, the brewer, saw shares lose 3.8 per cent to $45.65 after it lowered its earnings estimate, triggering off a downgrade of its stock to “sell” by Legg Mason analysts.

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