Stocks modestly higher ahead of Alcoa report

NEW YORK — Stocks are modestly higher in early trading Wednesday as investors wait for aluminum maker Alcoa Inc. to provide some guidance about the economy.

Investors worried that the world economy may take longer to emerge from recession than originally hoped are turning their focus this week to companies’ financial results and, more importantly, to what they have to say about business conditions for the rest of the year.

Alcoa kicks off earnings season Wednesday with its second-quarter report, to be released after the market’s close.

“(Their report) gives an indication if we are moving out of the doldrums and potentially into more recovery, or are we potentially falling backward, again,” said Doug Lockwood, chief investment officer at Cornerstone Wealth Management.

Wall Street analysts expect Alcoa to post a quarterly loss of 38 cents per share. In the same period a year earlier, Alcoa earned 66 cents per share on revenue of $7.6 billion.

In early morning trading, the Dow Jones industrials rose 11.64, or 0.1 percent, to 8,175.24. The Standard & Poor’s 500 index added 1.57, or 0.2 percent, to 882.60 and the Nasdaq composite index rose 2.23, or 0.1 percent, to 1,748.40.

After sending stocks soaring this spring on the belief that the economy was turning around, investors have put their buying on hold since mid-June amid an increasing number of disappointing economic reports.

The slight gains in the market Wednesday follow a sharp drop the day before; all the major indexes lost at least 2 percent, including the Dow, which had its lowest close since late April. Analysts, however, say the light volume that has marked trading in recent days shows little conviction behind the selling.

The decline came as crude fell for a fifth straight day. Investors are interpreting falling oil prices as a sign of economic weakness.

Oil prices have declined to near $62 a barrel from an eight-month high of $73 last week as investors believed that demand for energy would fall because of the strained economy. On Wednesday, a barrel of crude traded at $62.16, down 77 cents, on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 2.4 percent. In afternoon trading, Britain’s FTSE 100 index fell 0.5 percent, Germany’s DAX was up 0.1 percent and France’s CAC-40 was off 0.3 percent.

World leaders including President Barack Obama will be discussing the global economy as they start a three-day meeting in Italy.

Investors will also be looking to glean what they can from a key report on May consumer credit data, due out at 3 p.m. EDT.

The Federal Reserve report is expected to show that consumer credit fell $9.5 billion from April, according to Wall Street economists surveyed by Thomson Reuters. If they are right, it would mark the latest move by consumers to curb their borrowing, pay down debt and get their household budgets in better shape. That is a concern for investors because it means consumers aren’t spending at the levels needed for an economic recovery.

Meanwhile, bond prices were mostly higher. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.44 percent from 3.46 percent late Tuesday.

The dollar mostly rose against other major currencies, while gold prices fell.

About seven stocks rose for every six that fell on the New York Stock Exchange where volume came to a light 138.8 million shares.

In other trading, the Russell 2000 index of smaller companies slipped 0.45, or 0.1 percent, to 483.80.