U.S. MARKET AVERAGES

Spike in oil led market lower at the end. Higher than expected decline in August retail sales, two percent spike in oil price on inventory report, and general lack of buying interest has led averages in a tight trading range. Markets early gains have been erased at mid-day and averages closed lower at three exchanges.

August retails sales declined 2.1% on 12% drop in auto sales. The decline was greater than 1.7% anticipated by the market and largest decline in four years. On the second economic report of the day, U.S. industrial production increased 0.1% in August, the Federal Reserve announced on Wednesday. Capacity utilization stayed unchanged at 79.8%. Analysts were expecting production to advance 0.2% and capacity utilization to reach 79.8%.

Metals and Mining shares closed higher as gold prices firmed up by one percent, energy stocks are up as oil is up 2%, home builders, retailers, Internet, tech stocks and casino traded lower.

The Port of New Orleans resumed operations at two of the twenty seven terminals and may take more than four weeks before the port returns to the full operations capacity. The Gulf accounts for 55 to 65 percent of all U.S. corn, soy and wheat exports and handled 59 percent of the 50.2 million ton of grain shipped through all U.S. ports so far this year, the North American Export Grain Association said.

MOVERS AND SHAKERS

Lehman Brothers (LEH: chart) advanced nearly 2% after the company announced higher third-quarter profit connected with the strong fixed-income division. For the quarter, the company posted revenues of 3.9 billion representing a 47% improvement from the comparable improvement last year and an 18% increase over our second quarter results. This is highest quarterly revenue level ever. Net income was 879 million for the period, or $2.94 earnings per share, up over 70% versus the prior year and up approximately 30% over last quarter.

General Electric (GE: chart) shares were up 0.2% due to the report that the company is planning to sale some of its industrial units.

Northwest Airlines (NWAC: chart) dropped 0.6% following news reports that the company and Delta Air Lines Inc. (DAL: chart) could look for protection from bankruptcy as early as today.

Baidu.com (BIDU: chart) traded 24% lower as Goldman Sachs and Piper Jaffray set up coverage of the company with underperform ratings, pointing worries over unsustainable estimation.

Image Entertainment (DISK: chart) added 50% after the company said it received an undesirable buyout bid from Lions Gate Entertainment (LGF: chart).


ECONOMIC NEWS

The Department of Energy's Energy Information Administration revealed that crude oil inventories dropped by 6.6 million barrels for the week ended September 9, falling to 308.4 million barrels from the 315.0 million barrels recorded in the previous week. This followed a decline of 6.4 million barrels for the prior week, which was the first period to include data on Hurricane Katrina's aftermath. Even with the recent declines, oil inventories were still 11.3% higher than their level of the same time last year.

Gasoline inventories posted a week-over-week advance of 1.9 million barrels, partially reversing the prior week's decline of 4.3 million barrels. Gasoline stocks were down 7.4% from the same time last year, though this is an improvement over the previous week, when inventories were 8.6% below the prior-year mark. Inventories of distillate fuel oil fell by 1.1 million for the most recent week.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed on oil prices hovering below $64 a barrel, concerns of U.S. economy slowdown and lower corporate profits after Katrina’s impact. The Japanese stock market slid 0.5%, retreating from a four-year high Tuesday on sharp U.S. markets decline overnight. China’s Shanghai Composite surged to a five-month high of 0.8% on optimism about non-tradable reform. Hong Kong’s Hang Seng added 0.1% and South Korea’s Kospi climbed 1.1%. The dollar bought 110.34 yen.

European stocks closed higher, boosted by strong automotive sector on upbeat monthly sales data, with Volkswagen, Daimler Chrysler and Renault all rising. The German DAX 30 gained 0.2%, the French CAC 40 climbed 0.4%, and London’s FTSE 100 added 0.2%.

ENERGY, METALS, CURRENCIES

Oil prices surged on U.S. petroleum-stocks report, which showed crude inventories decline of 6.6 million barrels for the previous week. Light sweet crude October delivery rose $1.94 cents to $65.05 a barrel on the Nymex. Gasoline added less than nickel to $1.9373 a gallon, while heating oil gained eight cents to $1.9249 a gallon. London Brent was up 79 cents to $62.90.