Wall Street stumbled through an uneven session Wednesday, ratcheting up and down as the price of oil also seesawed and worries persisted about the financial sector.
Concerns about mortgage financiers Fannie Mae and Freddie Mac again dragged on the financial sector. Wall Street is nervous that the government-chartered companies will need a bailout from the Treasury Department, a move that could wipe out shareholders' equity.
The market's moves were exacerbated by light volume. So stocks that started the day lower turned higher after Fannie Mae Chief Executive Daniel Mudd said the concerns about the company's financial position are overblown, but later gave up their gains as oil prices rose.
"They haven't offered anything and we haven't asked for anything," Mudd said, referring to the federal government in a public radio interview Wednesday morning. "I don't anticipate that they will do that."
Fannie Mae and Freddie Mac shares moved well off their lows but were still each down more than 15 percent.
"The focus remains on Freddie Mac and Fannie Mae and the financials in general," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners Inc. He said declines in oil can help sentiment but that back-and-forth trading is "consistent with a nervous market."
In midday trading, the Dow Jones industrial average fell 2.44, or 0.02 percent, to 11,346.11 after being down by nearly 60 points and up more than 100. Concerns about inflation and the financial sector led the Dow to post its worst two-day performance since late June on Monday and Tuesday with an overall drop of about 310 points.
Broader stock indicators also fell in volatile trading Wednesday. The Standard & Poor's 500 index fell 1.16, or 0.09 percent, to 1,265.53, while the Nasdaq composite index fell 3.82, or 0.16 percent, to 2,380.54.
Oil, which has rebounded this week after dropping $35 from its July 11 high of $147.27, fluctuated after the Energy Department said crude oil inventories rose much more than forecast last week.
Energy costs remain a concern because of their effect on overall inflation. Government reports last week and on Tuesday showed larger-than-expected increases in prices faced by consumers and companies.
Light, sweet crude fell 95 cents to $113.58 per barrel on the New York Mercantile Exchange, but alternated between gains and losses.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.80 percent from 3.84 percent late Tuesday.
The dollar was mixed against other major currencies, while gold prices fell.
In corporate news, Fannie Mae fell $1.02, or 17 percent, to $4.99, while Freddie Mac declined 75 cents, or 18 percent, to $3.42. The stocks had shown steeper losses ahead of Mudd's comments.
H-P rose $2.16, or 5 percent, to $45.85 after posting better-than-expected quarterly results. Its results indicated that some sectors like technology are faring better than the financial stocks that have been pummeled by the credit crisis.
Monsanto Co. said it agreed to sell its Posilac brand of cow hormones to drug maker Eli Lilly & Co. for at least $300 million. Monsanto rose $4.18, or 3.7 percent, to $117.04, while Eli Lilly slipped 16 cents to $47.64.
Declining issues narrowly outnumbered advancers on the New York Stock Exchange, where volume came to 475.1 million shares.
The Russell 2000 index of smaller companies rose 1.79, or 0.25 percent, to 728.24.
Overseas, Japan's Nikkei stock average fell 0.10 percent. Britain's FTSE 100 rose 0.97 percent, Germany's DAX index advanced 0.56 percent, and France's CAC-40 rose 0.76 percent.
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