Stocks Up Slightly On Stronger Factory Orders

U.S. equities recouped early losses and were trading higher on Wednesday, likely buoyed by a better than expected factory orders report for July, which showed the manufacturing sector is holding up surprisingly well in spite signs of economic slowing in other parts of the U.S. economy. Oil prices continued to slip on strengthening in the U.S. dollar.

On Wednesday, the Dow Jones industrial average was trading 14.74 points, or 0.17%, higher at 11,537.52. The broader S&P 500 index inched up 1.20 points, or 0.13%, to 1,278.77. And the tech-heavy Nasdaq composite index gained 3.03 points, or 0.13%, to trade at 2,352.27.

On the New York Stock Exchange, 15 stocks were in the red for every nine that were rising, while the ratio on the Nasdaq was 12-8 negative amid active trading, S&P MarketScope said. Bond prices were climbing slightly, while a stronger dollar index continued to put pressure on commodity prices.

The closing of hedge fund manager Ospraie Management's flagship fund, which plummeted 27% in August on losses in energy, mining and natural resources stock holdings, is another blow to the commodities markets, as it's the one of the biggest closures ever of a commodities-focused hedge fund. The fund, which had an estimated $2.8 billion invested as of early August, had lost 38.59% of its value year-to-date as of Sept. 2.

The fund closing, announced by the firm's founder Dwight Anderson in a letter to investors on Tuesday, could spell more bad news for Lehman Brothers Holdings (LEH) , which has owned a 20% stake in the hedge fund manager since 2005.

Among stocks moving Wednesday, the Coca-Cola Co. (KO) said it has offered to buy China Huiyuan Juice Group Ltd., a Hong Kong listed company that owns the Huiyuan juice business throughout China, for $2.4 billion. The purchase, which is subject to preconditions relating to Chinese regulatory approvals, is expected to reduce Coca-Cola's earnings by three to four cents a share in the first full year after completion of the deal, and would boost profitability in the third year after completion. Standard & Poor's maintained its strong buy rating on the stock.

On the economic data front, July factory orders unexpectedly rose 1.3%, above the median estimate of a 0.4% gain and after an upward-revised 2.1% increase in June. Excluding transportation, factory orders were up 1.0% in July.

The U.S. factory data continue to defy recession fears, as the support from the booming commodity-sensitive and aerospace industries is offsetting weakness in other sectors, such as autos, Action Economics said.

The Federal Reserve's Beige Book, to be released Wednesday afternoon, could provide anecdotal evidence of economic slowing as well as indications of easing price pressures, ahead of the Sept. 16 Fed's policy committee meeting, S&P MarketScope said.

The Mortgage Bankers Association released its weekly mortgage applications survey for the week ending Aug. 29, showing a 7.5% increase in the Market Composite Index, a measure of mortgage loan application volume, on a seasonally adjusted basis. On an unadjusted basis, the Index rose 5.8% from the prior week and was down 27%. from a year ago. The Refinance Index increased 2.1% percent and the seasonally adjusted Purchase Index increased 10.5% from one week earlier.

Eric Rosengren, president of the Boston Fed, is scheduled to speak about the economy at a gathering in New Hampshire Wednesday afternoon.

Oil prices were trading lower, extending Tuesday's losses as the dollar continued to gain strength, and due to estimates of minimal hurricane destruction to energy installations in the Gulf of Mexico and signs of ongoing demand destruction from a slowing global economy. There's also an element of technical chart weakness dogging oil prices after the breech of the 200-day moving average on Tuesday for the first time since May, 2007.

Crude oil for October delivery was trading $1.67 lower at $108.04 a barrel.

Among other stocks in the news on Wednesday, First Horizon National Corp. (FHN) said it expects that as a result of persisting market weakness and ongoing efforts to aggressively address problem loans, 2008 net charge-offs are likely to exceed the previously expected range of $385 million to $485 million by about $100 million.

Forest Laboratories (FRX) and Laboratorios Almirall announced results from two global Phase III studies of aclidinium bromide, a novel long-acting inhaled anticholinergic for treatment of chronic obstructive pulmonary disease. The companies say studies confirm the bronchodilatory effect of aclidinium at the dose tested, although the magnitude was lower than seen in previous studies.

Medivation Inc. (MDVN) and Pfizer (PFE) agreed to develop and commercialize Dimebon, Medivation's investigational drug for treatment of Alzheimer's disease and Huntington's disease. Medivation will receive an up-front cash payment of $225 million and is also eligible to receive payments of up to $500 million as development and regulatory milestones are reached, plus additional undisclosed commercial milestone payments.

Major European indexes were trading lower Wednesday. In London, the FTSE 100 index fell 1.62% to 5,529.70. In Paris, the CAC 40 shed 1.55% to trade at 4,468.53, while Germany's DAX index was down 0.64% at 6,477.04.

In Asia, Japan's Nikkei 225 gained 0.64% to close at 12,689.59, while Hong Kong's Hang Seng index lost 2.17% to end at 20,585.06.

Treasury market

Treasury bonds were gaining ground on trepidation in the equities market. The 10-year note moved up to 102-09/32 for a yield of 3.72% and the 30-year bond climbed 12/32 to 102-24/32 for a yield of 4.33%.