Cautious Optimism Leaves Stocks, ETFs Mixed

Caution about the third quarter and a blow to the telecommunications sector left stocks and some ETFs down slightly Wednesday.

After a slow start, the Dow Jones Industrial Average fell six points to finish at 9726. The technology-rich Nasdaq rose seven points to 2110, while the S&P 500 jumped three points to settle at 1058.

After the Dow’s recent two-day 244-point rally in anticipation of a better earnings season -- one that began with a surprise from Alcoa (AA) after the close -- telecommunications stocks pulled down the market after news from the Federal Communications Commission cast a pall over wireless carriers.

FCC Chairman Julius Genachowski said he sees a crisis brewing over a lack of available airwaves needed for mobile Internet use. He is planning to spearhead a number of initiatives including ensuring that the Internet remains an open technology. That put pressure on wireless carriers AT&T (T), Verizon (VZ) and others.

It didn’t help the sector that AT&T revealed plans to allow Apple’s (AAPL) iPhone users to place Internet-based phone calls over AT&T's 3G network.

Another weight on the market: AirTran Holdings (AAI), which saw its shares sink after the air carrier said that it plans to sell $75 million in convertible senior notes and nine million shares. Avis Budget's (CAR) shares sank after the car-rental company said that it plans to sell $250 million in debt, due in 2014, and at the same time enter into a warrant transaction to purchase a hedge against the convertible notes.

Just after the bell, however, the aluminum giant Alcoa reported that its net income was $77 million, or eight cents a share, a reading that topped analysts' expectations. (Over the same period last year, earnings reached $268 million, or 33 cents a share.)

Although crude futures, as of 4:23 pm, traded on the Nymex rose 28 cents to $69.85 a barrel, oil ETFs had a mixed day. (See our winners and losers sections.)

Gold and other commodities got a boost on Tuesda, thanks to a surprise interest-rate increase by the Reserve Bank of Australia, which spurred broad-based stock gains and a pullback in the dollar. However, Michael Corkery of The Wall Street Journal called gold and other ETFs “bubblicious.” 

The reason is that gold is hitting record highs even though the credit markets have improved. Traditionally, gold moves with investors’ anxiety. That’s not the case these days. Gold hit a record high of $1,049 an ounce in Tuesday trading.

The same can be said for bond exchange-traded ETFs, Corkey wrote. The share prices of those ETFs are losing pace with the value of their underlying holdings because heavy demand for short-term bonds is outstripping supply.

That’s making the bonds harder to trade and, thus, creating a gap between the ETF prices and the underlying bond values, he says.

For a detailed rundown on Monday’s trading session see our market story. 

The Oil Service HOLDRS Trust (OIH) gained 2.06%, while the ProShares Trust: Ultra Financials ProShares (UYG) rose 1.7%.

The ProShares Trust II: Ultra DJ-AIG Crude Oil (UCO) fell 2.79%, while the United States Oil Fund, LP (USO) lost 1.59%.

Earnings and Conference Calls
Barnes & Noble, PepsiCo, Levi Strauss, Marriott International

Economic Data
8:30 a.m. Initial Jobless Claims
8:30 a.m. Continuing Claims
10:00 a.m. Wholesale Inventories for August