US stocks closed slightly higher on Wednesday, hovering near three month lows, as investors considered the Federal Reserve's poor economic forecasts and President Obama's home rescue plan. The DJIA closed 3.03 points higher at 7555.63. During the session, the Dow had fallen to the lowest point since November 21 considered by some to be the low of the bear market. The S&P 500 closed 0.75 points lower at 788.42 and the Nasdaq 2.69 points lower at 1467.97. The Federal Reserve revised lower its economic outlook for the first half of the year, saying it expects the economy to shrink and unemployment to rise. The report, released in the afternoon, was part of the minutes from the last Fed policy meeting in which the bankers held interest rates steady at historic lows.
President Obama unveiled a multi-billion dollar plan that is meant to help up to 9 million borrowers who are struggling amid falling house prices and unaffordable mortgage payments. Yet investors worried about the prospects of an economic recovery and the timeline for any turnaround.
After the market close, Hewlett Packard reported lower fiscal first quarter earnings that met analysts estimates on higher revenue that missed estimates. The company also gave a forecast for current quarter results that is short of expectations. The stock fell 4 percent in extended hours trading.
In economic news, a report released earlier in the session showed January house starts plummeted 17 percent from December to an all time low. Building permits fell 4.8 percent from December to an all time low. Another report showed production at the nation's factories and mines slumped 1.8 percent in January, worse than expected. Fed Chairman Ben Bernanke said that the Central Bank will improve how it discloses information because of greater interest in its ballooning balance sheet. Bernanke spoke at the National Press Club in Washington D.C.
In other company news, Goodyear Tire and Rubber said it will cut 5000 jobs this year as slowing auto sales have eaten into demand for its products. Comcast reported a weaker quarterly profit and said it lost 233,000 subscribers in the fourth quarter of 2008. However, excluding charges, profit was better than analysts were expecting. The stock fell 4 percent in active Nasdaq trading.
General Electric CEO Jeffrey Immelt said he gave up a 2008 bonus and other compensation in the aftermath of GE's weaker earnings and sliding stock prices last year.
Treasury prices slipped, raising the yield on the 10 year note to 2.75 percent from 2.65 percent. Lending rates were little changed. The 3 month Libor rate was 1.25 percent unchanged from Tuesday. The overnight Libor rate fell to 0.3 percent from 0.31 percent Tuesday. The dollar gained against the euro and the yen.
US light crude for March delivery fell 31 cents to settle at $34.62 a barrel on the New York Mercantile Exchange.
COMEX gold for April delivery rose $10.70 to settle at $978.20 an ounce.
In London the FTSE100 closed lower on Wednesday, down for its fifth straight session, as energy stocks fell on depressed oil prices, while financials took a further beating and weak data weighed. The FTSE 100 closed down 27.30 points at 4,006.83. Companies going ex-dividend, including BP and Rio Tinto weighed on the index, but weak data and the bleak economic outlook also deepened losses from commodity stocks.
British factory orders fell more than expected this month and at their fastest rate since 1992, the Confederation of British Industry said. British average weekly earnings grew by 2.2 percent in December 2008 compared with a year earlier, the weakest pace of growth since February 2003, the government said.
Energy stocks took the most points off the index, with ex-dividend BP down 3 percent. BG Group, Cairn Energy and Tullow Oil were down between 1.4 and 2.3 percent. Similarly mining stocks were hit by the poor outlook for demand with Rio Tinto, Kazakhmys, and BHP Billiton down 0.7 to 2.2 percent.
Minutes from the Bank of England's February Monetary Policy Committee meeting revealed that policymakers voted unanimously this month to seek government consent for quantitative easing and voted 8-1 to cut interest rates to 1 percent, a record low. This did little to settle anxious investors' nerves and the pound fell to a two-week low against the dollar below $1.41.
Royal Bank of Scotland tumbled 12.6 percent after the Daily Telegraph said the lender needs to find up to £8bn if it is to subscribe to a state-backed insurance scheme designed to cap any losses on toxic assets.
Shares in UK insurers were sharply lower again, led by Legal & General which fell 11.7 percent as it failed to reassure investors on Tuesday in an update on its capital position, despite quelling rumours of a rights issue. Prudential fell 6.6 percent while Amlin lost 1.5 percent.
Liberty International gained 5.6 percent, boosted by talk that it could sidestep a deeply-discounted rights issue by spinning off its non-retail arm and placing shares with key investors. Defensive drugmakers were in demand, with GlaxoSmithKline up 1.5 percent while Shire gained 0.7 percent. Schroders, Scottish & Southern Energy and Hammerson also fell after going ex-dividend.
In Japan, the Nikkei average rose 0.3 percent, a day after closing at its lowest point in nearly four months, as exporters gained on the dollar's first move above 93 yen in six weeks. Fast Retailing Co climbed after a brokerage upgrade on expectations for robust sales at its Uniqlo discount clothing chain, while Astellas Pharma rose after another brokerage upgraded its stock and recommended it as defensive play. But investors remained wary as the yen is under pressure due to concern about the Japanese economy and political uncertainty, with voter support sinking for Prime Minister Taro Aso.
The Nikkei closed 23.21 points higher at 7557.65. After the close, Bridgestone Corp said its operating profit fell 47 percent in 2008 on weak US sales, yen strength and high raw materials costs, and it forecasts a further drop this year.