Stock indexes end lower; FedEx falls, offsets M

NEW YORK, Dec 21 (Reuters) US stocks edged lower on Wednesday in light trading as a disappointing outlook from FedEx Corp pulled down transport stocks and offset the positive influence of the latest round of proposed takeovers.

Shares of FedEx fell 1.9 percent, or $2.20, to $111.85.

The descent of FedEx's stock dragged down the shares of rivals such as United Parcel Service Inc. and pressured the Standard & Poor's 500 Index after the package delivery company reported a third-quarter earnings forecast that fell below Wall Street's estimates.

''For most of these stocks, the fundamentals aren't looking very positive right now,'' said Thomas Leritz, manager of Argent Capital Management's capgoods and transportation portfolio.

On the M&A front, the latest deal involved Ericsson AB, the Swedish telecommunications equipment maker, which offered to buy Redback Networks Inc., a networking equipment vendor, for $2.1 billion in cash. The offer came after about $100 billion of proposed deals had been announced this week worldwide.

''There have been a lot of takeovers and with Redback today, it's adding to the excitement,'' said Steve Goldman, a market strategist with Weeden & Co. in Greenwich, Connecticut.

But he added that what had been broad-based gains were narrowing as investors concentrate on large multinational names whose profits will hold up better amid the slowing economy.

The dollar weakened this week, lifting shares of 3M Co. and General Electric Co.on Wednesday. These blue chips are among global companies that benefit from the anemic dollar as it usually stimulates overseas sales. The U.S. currency has dropped nearly 2 percent against the euro since the last week of November.

The Dow Jones industrial average dipped 7.45 points, or 0.06 percent, to end at 12,463.87, while the Standard & Poor's 500 Index edged down 2.02 points, or 0.14 percent, to finish at 1,423.53. The Nasdaq Composite Index fell 1.94 points, or 0.08 percent, to close at 2,427.61.

DOW'S INTRADAY RECORD NEAR 12,500 Earlier, the Dow hit an intraday record high of 12,498.47.

On Tuesday, the blue-chip Dow average had closed at its 21st record high since the start of October.

Traders said Wednesday's light volume will wane even further as the week progresses and more market participants start their holiday weekend.

GE rose 0.4 percent, or 14 cents, to $38.15 and 3M was up 0.9 percent, or 72 cents, to $78.83 on the New York Stock Exchange.

These stocks were amomg the Dow's major gainers and helped limit its decline. GE ranked No. 3 among the S&P 500's top advancers and helped curb its loss for the day.

Shares of Maxim Integrated Products Inc. rose 4.4 percent, or $1.32, to $31.52 and topped the Nasdaq 100's advancers.

Maxim's gain helped keep the Nasdaq's loss for the day to just under 2 points after the chip maker said its founder and chief executive will retire on Jan. 1 for health reasons.

Maxim is among the companies whose stock option grants and practices have been under federal investigation.

HEAVY CRUDE AND TRANSPORTS Exxon Mobil Corp. fell 1.2 percent, or 91 cents, to $76.08 on the NYSE. The stock was the biggest drag on both the Dow and the S&P 500 as investors locked in profits following a strong session a day earlier.

The Dow Jones Transportation Average fell 1.1 percent. The DJT average took a hit when FedEx shares fell, but it also was bogged down by a slide of 1.3 percent, or 98 cents, in United Parcel Service Inc. shares to $74.77.

Also weighing on the Dow Jones transports was the stock of railroad Norfolk Southern Corp., down 3.7 percent, or $1.87, at $49.28 on the NYSE. The railroad company's stock fell after a senior executive said Norfolk Southern's intermodal and automotive businesses faced a challenging fourth quarter.

Trading was moderate on the New York Stock Exchange, where about 1.38 billion shares changed hands, below last year's daily average of 1.61 billion.

On the Nasdaq, about 1.82 billion shares were traded, slightly below last year's daily average of 1.80 billion.

Advancing shares beat decliners on the NYSE by a ratio of about 5 to 4, while on the Nasdaq, more than five stocks rose for every four that fell.

REUTERS PKS RN0430