NEW YORK (Reuters) - The Dow Jones industrial average rose on Thursday after economic bellwether Honeywell International raised its profit forecast, offsetting doubts about whether a global plan to thaw credit markets could work.
But the broader market closed little changed, as Goldman Sachs Group (GS.N), Citigroup (C.N) and other banks fell on growing pessimism about the scope of a plan announced on Wednesday by global central banks to make it easier for stressed banks to borrow.
Also souring the mood were fresh signs that inflation was accelerating. The government said U.S. producer prices surged at their fastest in 34 years last month. That fueled concerns that the Fed’s hands may be tied when it comes to further rate cuts.
But Honeywell (HON.N) shares rose 4 percent and led the Dow higher after the diversified manufacturer increased its 2008 profit forecast on strength in its aerospace business and in emerging markets.
“You’ve still got a hangover from the Fed,” said Phil Orlando, chief equity market strategist at Federated Investors in New York.
“Also today, you had hot inflation data, which got the market worried that that could stop the Fed from easing again,” Orlando said. “But I think this is a knee-jerk reaction.”
The Dow .DJI was up 44.06 points, or 0.33 percent, at 13,517.96. The Standard & Poor's 500 Index .SPX was up 1.82 points, or 0.12 percent, at 1,488.42. The Nasdaq Composite Index .IXIC was down 2.65 points, or 0.10 percent, at 2,668.49.
In a sign of skepticism about central bank efforts to combat the credit squeeze, interbank lending rates showed only a slight decline on Thursday. <ID:nL13874463>.
Lehman Brothers Holdings Inc LEH.N, the fourth largest U.S. investment bank and the first to report fourth-quarter earnings, said profit declined 11 percent. Its shares ended down 0.7 percent at $61.37.
The bank also announced $2.2 billion of write-downs from mortgages.
Shares of some of Lehman’s rivals fell even more. Merrill Lynch MER.N was off 1.7 percent at $57.83 and Bear Stearns BSC.N was down 2.4 percent to $98.39.
Goldman Sachs fell 1.9 percent to $208.48 and Citigroup slid 1.5 percent to $31.01.
Shares of Biogen Idec (BIIB.O) were the top drag on the Nasdaq after the drug maker ended its own auction on Wednesday to sell itself after failing to get any bidders. Biogen shares plunged 23.7 percent to $57.91.
Shares of Dow Chemical (DOW.N) shot higher after the company said it is forming a joint plastics venture with a unit of Kuwait Petroleum. Dow shares were up 6.3 percent at $44.39.
Data on the consumer was a bright spot. A government report showing retail sales jumped in November more than economists had forecast suggested holiday shoppers were coping with high energy costs and the fallout from the housing slump.
Energy stocks rose again after oil held above $92, and that boosted the major stock indexes. Exxon Mobil (XOM.N) rose 0.9 percent to $92.72.
Editing by Jonathan Oatis