Energy prices garner the attention Wednesday, which led to declines for the major market indices. The Dow ($INDU) fell 206.48 points to close the session at 12,814.35. The S&P 500 ($SPX) lost 25.69 points, closing at 1,392.57. The NASDAQ ($COMPQ) declined 44.82 points to 2,438.49. Volume was remained on the light side with 1.28 billion shares traded on the NYSE and 2.28 billion shares exchanged on the Naz. Market breadth was negative by a 9-to-22 and 8-to-21 margin on the Big Board and Naz respectively.

Cisco (CSCO) and Disney (DIS) reported better than expected earnings and productivity was stronger than expected. However, stocks fell on another record high in crude prices. Even a large merger deal couldn’t push stocks into the black with traders concerned about the housing sector and inflation.

Oil closed the session at $123.53, another closing high, which was a gain of $1.69 a barrel. Crude prices are up more than 10 percent this week alone and this is not providing the backdrop the bulls would like dealing with inflation. Ironically, crude inventory levels moved higher by a sharp 5.7 million barrels this past week with gasoline reserves also up slightly.

Shares of CSCO declined 2.1 percent despite the fact the company announced better than expected results for its fiscal third-quarter. The networking giant has low visibility going forward, noting that demand has softened and this is a concern for traders. After rising to a high at $27 a share Wednesday, CSCO ultimately closed at $25.78.

DIS shares were more fortunate, rising 2.88 percent to a price of $34.70. Despite a soft economy, the media giant stated that attendance at its theme parks was strong and that its movie division also saw strength. Overall, profits rose 22 percent in the second quarter, putting DIS shares just a few points from a new 52-week high.

Clearwater (CLWR) and Sprint Nextel (S) announced an agreement this morning worth $14.5 billion. The two companies are combining their wireless divisions to form a new company that will keep the Clearwater name. The new company will continue developing a mobile network based on WiMax technology. Initially, CLWR shares rallied on the news, but ultimately the stock closed with a loss of 1.46 percent to $16.22. Shares of S were also lower, but by just a third of a percent.

Economic news was mixed Wednesday with productivity up a better than expected 2.2 percent in the first quarter. At the same time, unit labor costs rose 2.2 percent, which was 4-tenths below estimates. However, economists are not pleased with the decline in hours worked, which could be viewed as a sign that we are in a recession.  

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site