Stock trading is muted after 2 days of gains as market waits for Alcoa; Dollar rebounds

Stocks waver after 2-day rally as earnings loom

NEW YORK — Stocks are wavering after a two-day spike as the dollar rebounds and traders await corporate profit reports.

The seesaw trading Wednesday comes as investors have little economic news to shape sentiment and are looking to earnings reports for the July-September quarter for more clues about the economy. Aluminum company Alcoa Inc. will be the first of the 30 companies that make up the Dow Jones industrial average to report results after the closing bell.

Earnings will provide insight into just how strong any economic rebound has been so far. During the second quarter, companies largely beat modest earnings expectations by cutting costs and streamlining operations. That helped fuel the market’s rally throughout the summer.

Now, though, investors will be looking for stronger sales to drive earnings. That would indicate companies are finding their footing again and consumers are picking up their spending. Many analysts, however, are skeptical that consumer spending will be strong.

“The consumer is just really damaged,” said Len Blum, a managing partner at Westwood Capital LLC. “Every time we see a blip, it’s not sustainable.”

A report from the Federal Reserve, due at 3 p.m. EDT, is expected to show consumers cut their borrowing for the seventh straight month in August. Economists polled by Thomson Reuters, on average, forecast consumer borrowing fell $10 billion at an annual rate in August.

Traders also tracked the dollar, which rose against other major currencies after sagging Tuesday following a surprise interest rate increase in Australia. A stronger dollar can cut into profits from companies selling goods overseas.

In late morning trading, the Dow Jones industrial average rose 2.19, or 0.02 percent, to 9,733.44. The Standard & Poor’s 500 index rose 2.59, or 0.3 percent, to 1,057.31, while the Nasdaq composite index added 5.41, or 0.3 percent, to 2,108.98.

In earnings news Wednesday, Costco Wholesale Corp. said its fiscal fourth-quarter profit fell 6 percent, partly due to a stronger dollar and increased employee benefit costs, but results beat analysts’ estimates. Shares of the warehouse club operator rose $1.73, or 3 percent, to $59.66.

Alcoa’s shares gained 10 cents to $13.99 ahead of its report.

Energy and material stocks also got a boost as commodities prices rose. Gold continued to edge higher after hitting a new high of $1,049 an ounce overnight. Prices added about $4 to $1,043 in recent trading.

Oil prices added 33 cents to $71.21 per barrel on the New York Mercantile Exchange after the government reported that crude inventories fell last week. Gasoline supplies, however, grew.

Rising commodity prices helped push stocks higher on Tuesday, bringing the Dow’s two-day gain to 244 points, its best back-to-back advance since July. The resurgence came after two straight weekly declines, also for the first time since July.

Bond prices rose, sending the yield on the benchmark 10-year Treasury note down to 3.21 percent from 3.26 percent late Tuesday.

Declining stocks narrowly outpaced advancers on the New York Stock Exchange, where volume came to 340.7 million shares.

The Russell 2000 index of smaller companies rose 0.70, or 0.1 percent, to 602.68.

Overseas, Japan’s Nikkei stock average rose 1.1 percent. In afternoon trading, Britain’s FTSE 100 fell 0.4 percent, Germany’s DAX index declined 0.2 percent, and France’s CAC-40 slipped 0.2 percent.