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NEW YORK - US stocks traded mainly lower on Wednesday morning with investors maintaining a wary stance as major American corporations began reporting their second quarter earnings amid uncertain economic times.
Stocks endured a lacklustre start a day after Wall Street rallied in the wake of a sharp fall in oil prices. A key oil contract, traded in New York, bounced back somewhat Wednesday to US$137(S$186) a barrel amid renewed geopolitical jitters over Iran's nuclear ambitions.
The blue-chip Dow Jones Industrial Average was down a scant 10.34 points (0.09 per cent) at 11,373.87 at 1500 GMT (11.00 pm Singapore time).
The technology-dominated Nasdaq composite index had lost 6.54 points (0.29 per cent) to 2,287.90 although the broad market Standard & Poor's 500 index had managed a slight gain of 0.53 points (0.04 per cent) to 1,274.23.
Aluminum giant Alcoa reported an expected dip in profits on Tuesday after the market close, and many analysts say the credit crunch will likely have exacted a toll on bank earnings.
'More reports like Alcoa's, which convey the market's view on earnings has gotten too negative, could give way to an earnings season rally if oil prices remain in check and the financial stocks start acting better,' said Mr Patrick O'Hare, a market analyst at Briefing.com.
Wall Street has been battered this year by rocketing oil prices, but also a lingering housing market downturn and a related credit crunch.
Some analysts have warned that earnings, particularly from investment banks which have been hit by large mortgage-related losses, will not be too rosy.
The Fitch Ratings agency issued a report predicting that Merrill Lynch will likely post a fourth straight quarterly loss when it reports its second quarter earnings on July 17.
The credit rating agency said there were 'diminished expectations that Merrill's fixed income, currency and commodities operations will attain a sustainable level of core profitability in the near-term.'
Other industries are also struggling to offset the economic headwinds, however, as large airlines and delivery firms vie to cut costs in the face of high oil costs.
In stock action, Alcoa was up 1.2 per cent at US$32.72 dollars. Merrill Lynch was 3.2 per cent lower at US$31.72 dollars. General Electric, which is due to post its latest earnings on Friday, was 1.5 per cent weaker at US$27.64 dollars.
Bond prices firmed as stocks remain depressed. The yield on the 10-year US Treasury bond fell to 3.871 per cent from 3.880 per cent Tuesday and that on the 30-year bond declined to 4.446 per cent against 4.456 per cent.
Bond yields and prices move in opposite directions.
Oil prices regained ground after Iran test-fired a missile which it said is capable of reaching Israel amid geopolitical angst over Teheran's nuclear programme which it insists is for peaceful purposes.
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