Dow, S&P near flat after rally fades
NEW YORK (Reuters) - The Dow and S&P 500 ended little changed on Wednesday after a rally fizzled when doubts emerged that lifting investment caps on the two largest home financing companies was enough to prevent deeper damage to the housing market.
Technology shares rose. International Business Machines Corp (IBM.N) said it has become more confident about its U.S. business, a day after announcing a $15 billion stock-buyback program. Its shares rose 1.8 percent. On the Nasdaq, shares of Apple Inc (AAPL.O) gained 3.2 percent.
Fannie Mae (FNM.N), the largest provider of home funding, rose 1.1 percent to $27.27 on hopes that fewer restrictions on its investments may jump start the housing market and its profits.
Earlier in the session, the broader market rose on the news that government regulators would let Fannie Mae and its rival Freddie Mac (FRE.N) invest more in the mortgage market. But later in the session, the gains eroded as investors pondered more defaults and foreclosures that led to Fannie Mae's huge quarterly loss, reported before the opening bell.
"The bottom line is housing is an issue, maybe the biggest issue, so anything we can do to help that is a net positive. At the end of the day, though, the question comes up: How much will this actually do, given how much capital Fannie and Freddie actually have?" said Bill Stone, chief investment strategist for PNC Wealth Management in Philadelphia.
The Dow Jones industrial average .DJI was up 9.36 points, or 0.07 percent, at 12,694.28. The Standard & Poor's 500 Index .SPX was down 1.27 points, or 0.09 percent, at 1,380.02. The Nasdaq Composite Index .IXIC was up 8.79 points, or 0.37 percent, at 2,353.78.
Freddie Mac shares dipped 0.5 percent to $25.09.
Apple said it will give details next week of how outside programmers can create software for its iPhone, a move aimed at spurring demand for the multifunction device. Its shares ended at $122.96.
IBM shares ended at $116.46.
Utility shares were lower, however, including those of Dynegy Inc (DYN.N). The independent power producer posted results that fell short of estimates and trimmed its 2008 earnings forecast. Its shares fell 8.5 percent to $7.56.
The market took comments by Federal Reserve Chairman Ben Bernanke as a signal that more Fed rate cuts are in store.
Bernanke told lawmakers that downside risk still dogged the U.S. economy despite a series of interest-rate cuts.
The U.S. central bank, however, will act in a timely manner to support growth and provide insurance against downside risks, Bernanke told the U.S. House Financial Services Committee in the Fed's semiannual monetary report to Congress.
Stocks had opened lower as U.S. oil prices climbed to a record above $102 a barrel, the dollar slid and weaker-than-expected data on new home sales and durable goods orders stirred worries about the economy.
Trading was moderate on the New York Stock Exchange, with about 1.5 billion shares changing hands, below last year's estimated daily average of roughly 1.9 billion, while on Nasdaq, about 2.2 billion shares traded, above last year's daily average of 2.17 billion.
Declining stocks outnumbered advancing ones on the NYSE by 17 to 14 while decliners beat advancers on the Nasdaq by about 15 to 14.
(Editing by Jan Paschal)
