Decision on BP fund brings clarity to markets

NEW YORK - BP P.L.C.'s agreement to put $20 billion into a fund for victims of the Gulf of Mexico oil spill lifted the stock market off its lows and sent the major indexes to a narrowly mixed finish.

The oil company also said Wednesday that it had canceled a dividend payment totaling about $2.6 billion that was scheduled for Monday. It also will not declare a dividend for the second and third quarters. Investors saw the news as an end to the uncertainty about BP's stability, and that helped steady the overall market.

The market fell early on news that home construction and applications for building permits slumped in May after the end of a tax credit for home buyers.

Meanwhile, FedEx Corp. released a disappointing profit forecast for the fiscal year that began June 1, and that raised more questions about the economic recovery. The package-delivery company is seen as a barometer of the economy because shipping demand tends to increase as business conditions improve. The stock fell almost 6 percent.

A Commerce Department report on housing raised concerns that weaker demand for homes will hurt an economic rebound. Construction of homes and apartments fell 10 percent from a month earlier to an annual rate of 593,000, well below the 650,000 economists had forecast.

The home buyer's credit was part of the government stimulus package designed to help the economy recover from the mortgage and financial crises of 2008. Investors have been uneasy about what would happen to the economy when the government started to withdraw those measures.

The Dow Jones industrial average rose 4.69, or 0.05 percent, to 10,409.46, its fourth advance in five sessions. During morning trading, the Dow was down as much as 72.

The S&P 500 index fell 0.62, or 0.06 percent, to 1,114.61, and the Nasdaq crept up 0.05 to close at 2,305.93.

The Dow is still down more than 7 percent from the 2010 high of 11,205.03 it reached April 26.

Stocks also steadied after the euro pulled off its lows. A Spanish newspaper reported that the International Monetary Fund and the European Union were trying to come up with a financial rescue for Spain. That hit the euro and pushed the dollar higher. Officials in Spain denied the report. The country, like Greece and Portugal, is facing high debt loads. The euro fell to $1.2318. Last week, it was at a four-year low of $1.1878.

U.S. markets have been tracking the moves of the 16-nation currency because it is seen as a measure of confidence in Europe's economy. European countries are in the midst of cutting spending, and investors are concerned that those cutbacks could curtail the region's economic rebound and, in turn, the U.S. recovery.

Shares of FedEx fell $4.94, or 5.95 percent, to $78.07. The company said its fiscal 2011 outlook was based on the assumption of a continued "moderate recovery" in the global economy.

BP shares rose 45 cents, or 1.43 percent, to $31.85. The company's stock is down by nearly half since the day of the explosion, when it was trading at about $60.

Shares of home builders fell after the government's report. Shares of Toll Bros. Inc., of Horsham, Pa., fell 15 cents to close at $18.78, while KB Home shares fell 22 cents to close at $12.93.

Crude oil rose 73 cents to close at $77.67 per barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 2.64, or 0.39 percent, to 666.13.