Stocks Close Lower, Ending 3-Session Rally; Oil Prices Fall
U.S. stocks retreated modestly Tuesday, halting a three-session rally, as blue chips once again ran out of gas just as they returned to their levels before last month’s sudden market downturn.
In foreign markets, Japanese shares rose further, but most other Asian markets lost ground. Early today, Japanese shares turned sharply lower.
Meanwhile, oil prices fell Tuesday to their lowest level since Sept. 24, as more traders doubted the severity of U.S.-Iraq tensions.
On Wall Street, the Dow Jones industrial average, which had added about 300 points in the three previous sessions, lost 47.40 points to 7,650.82--stalling once again after trying to breach 7,700. That was the Dow’s level before it plunged 554 points on Oct. 27.
Falling stocks topped winners by about 1,764 to 1,188 on the New York Stock Exchange. In the Nasdaq market, the composite index was off 13.67 points at 1,600.44.
U.S. stocks climbed early Tuesday, after Tokyo’s Nikkei-225 index rallied for a second day, gaining 443.25 points, or 2.7%, to 16,726.57. The market had leaped nearly 8% on Monday.
Japanese investors were initially cheered Tuesday by a news report that Japan would act aggressively to prop up its ailing bank sector, including using public funds.
Investors appeared to overlook that a long-awaited plan to stimulate Japan’s anemic economy fell short of expectations. The plan focuses on deregulation efforts but does not include tax cuts.
But while Japanese shares gained Tuesday, other Asian markets declined again, reviving worries about the region’s economic future. Malaysia’s key index plunged 6.8%, Hong Kong’s fell 1.7% and South Korea’s was off 0.5%.
And early today, renewed selling hammered those markets, pulling Japan lower as well. The Nikkei was off 709.99 points, or 4.2%, to 16,016.58 near midday.
On Wall Street on Tuesday, investors were reminded about the potential for fallout from the Asian debacle. Avon Products warned that fourth-quarter earnings won’t meet analysts’ estimates because of lower-than-expected sales in Brazil, China and Japan.
Avon cited tighter regulatory controls in China and concern among Brazilian consumers about their economy, which has been rattled by Asia’s woes.
Avon’s shares dove $5 to $57.50, hurting other multinational issues.
“No matter how you slice the baloney here, the events that we saw in Asia are on balance negative for [corporate] earnings,” said Rick White, who manages $2.4 billion for Salomon Bros. Asset Management in New York. “It’s hard to make a case for the market rocketing north.”
Among Tuesday’s highlights:
* Other consumer issues falling with Avon included Gillette, down $1.06 to $90.19; Colgate-Palmolive, down $2.31 to $63.94; and Revlon, down $1.75 to $33.13.
* Oil services stocks were sharply lower as oil prices sank. Near-term crude oil futures on the New York Merc dropped to $20.04 a barrel, off 22 cents and the lowest since Sept. 24.
In the oil sector, Schlumberger sank $4.56 to $83.63, Halliburton lost $4.25 to $55 and Western Atlas was off $4.19 to $70.81.
* AT&T;, one of the 30 Dow industrials, soared $3.88 to $52.50 after Lehman Bros. analyst Blake Bath reiterated a “buy” rating on the stock, with a 12-month price target of $72 a share. Bath said that after meeting with company executives, he’s convinced AT&T; will take steps to cut expenses and make a key acquisition.
In the bond market, yields closed marginally higher, despite a benign inflation report. The yield on the bellwether 30-year T-bond closed at 6.07%, up from Monday’s 21-month low of 6.06%.
In currency trading, the dollar rose half a yen against the Japanese currency, ending at 126.15 yen, up from 125.65 on Monday.
Market Roundup, D10
