U.S. MARKET AVERAGES

The three major averages trade below the flat line. The market lacks leadership and all sectors are currently in the negative. Intel’s disappointing earnings and revenue outlook have weighed on the market sentiment throughout the whole trading session, offsetting robust earnings reports, positive economic data on housing stars, and crude-oil prices drop. The tech giant’s earnings missed expectations by a penny per share and warned of slow sales in the fourth quarter. The news led the investors to conclude that consumer spending, which represents 70% of the economy, is slowing down.

Stocks turned mixed with a drop in oil prices which came after a positive Energy Department report on petroleum inventories, helping to ease consumer spending concerns. A barrel of light crude was quoted at $62.10, down $1.10, on the New York Mercantile Exchange.

Stocks were also supported by upbeat earnings reports from J.P Morgan Chase(JPM: chart), Altria(MO: chart), Motorola(MOT: chart), Yahoo (YHOO: chart).

Concern over inflation and consumer spending drew investors' attention away from some positive economic news. The Commerce Department said new housing construction rose 3.4% to an annualized rate of 2.108 million units, far greater than the 1.975 million economists expected.

United Technologies (UTX: chart) is the best Dow performer, up 2.3% after a sharp decline yesterday on earnings report. JP Morgan (JPM: chart) is posting a gain of 2%on better-than-expected quarterly profit.

GM (GM: chart) is one of the worst performing Dow components, further retreating from the sharp advance it posted on Monday. The stock is showing a decline of 1.9%. Intel (INTC: chart) is also a significant drag on the Dow, falling about 1.9% on its earnings report. Honeywell (HON: chart) is also falling by 1.8% on earnings news.

MOVERS AND SHAKERS

Dow component Intel Corp (INTC: chart) reported solid third-quarter earnings, but provided an outlook for fourth-quarter revenue where the mid-point of the range was slightly below analyst expectations. The company said net income for the period ended October 1 rose to $2 billion, or 32 cents a share, up from $1.9 billion, or 30 cents, a year ago. Intel is expected to be under pressure today.

Another Dow component, J.P. Morgan (JPM: chart), reported an increase of 78% in adjusted earnings. The company also said that Jamie Dimon will take over as the company’s chief executive officer six months earlier. The investment bank’s shares added 2%.

Honeywell International Inc. (HON: chart) posted quarterly revenue that fell slightly of Wall Street forecast. The company’s stock lost 1.2% yesterday and is expected to go down today.

Yahoo Inc. (YHOO: chart) reported a growth in revenue from online advertising and Internet services that helped the company to compensate a quarterly profit that was nearly unchanged from a year ago. Yahoo posted $254 million, or 17 cents a share, for the period ended September 30. The company’s stock gained 1.7%.

Motorola Inc. (MOT: chart) posted earnings that went ahead of expectations, boosted by higher handset sales, a one-time tax benefit and the sale of stock in Nextel Communications. The company reported a net profit of $1.75 billion, or 69 cents a share, up from $479 million, or 20 cents, a year ago. Motorola’s shares gain 2%.

ECONOMIC NEWS

Crude oil inventories advanced sharply in the latest week, according to government data released Wednesday, adding to the more moderate gain recorded during the previous period. Stocks of gasoline advanced as well.

The Department of Energy's Energy Information Administration revealed that crude oil inventories climbed by 5.6 million barrels for the week ended October 14, rising to 312.0 million barrels from the 306.4 million barrels recorded in the previous week. This followed an advance of 1 million barrels for the prior week. Oil inventories are now 11.9% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week advance of 2.9 million barrels, the government said, more than reversing the previous week's decline of 2.7 million barrels. Gasoline stocks are now 4.2% below their levels of last year. Inventories of distillate fuel oil fell by 1.9 million barrels in the most recent week.

Wednesday morning, the Department of Commerce released its report on housing starts and building permits in the month of September. The report showed that housing starts and building permits both rose unexpectedly.

The report showed that housing starts rose 3.4 percent to a seasonally adjusted annual rate of 2.108 million units in September from a revised 2.038 million unit rate in August. Economists had expected housing starts to fall to a 1.950 million unit rate from the 2.009 million unit rate originally reported for August.

The unexpected increase in housing starts reflected strong growth in the South, where housing starts rose by 6.9 percent. Housing starts rose by 1.9 percent in the Midwest while coming in unchanged in the Northeast and West.

The Commerce Dept. also said that building permits rose 2.4 percent to a seasonally adjusted annual rate of 2.189 million units in September from a 2.138 million unit rate in August. The increase came as a surprise to economists, who had expected building permits to fall to a 2.075 million unit rate.