Blue Chips Skid on Oil; Nasdaq Gains

The stock market on Monday finally ran into something it didn’t like: a sharp rebound in oil prices.

The Dow Jones industrial average sank 90.18 points, or 1%, to 8,816.25 as oil prices rocketed on news of production cutbacks by key oil exporters. (Stories, A1, D1)

But the broad market was mixed, with the Nasdaq composite index inching up 3.35 points to 1,792.51 as some of the profits being taken in blue chips found their way into technology stocks.

And while the Dow gave back a few of the 998 points it had gained between Jan. 1 and last Friday, Monday’s decline didn’t even erase all of Friday’s surge, when the index shot up 103 points.

“This market was set up not to do well here today with the reversal of Friday’s action and higher oil prices,” said Richard Cripps, chief market strategist at Legg Mason Wood Walker.

“But it just continues to isolate negatives and not let them spill over into broader investment issues,” he said.

Indeed, declining issues led advances by a fairly narrow 16-14 margin on the New York Stock Exchange and by a 23-19 edge on Nasdaq. Volume on the Big Board was active at 631 million shares.

Near-term crude oil futures shot up $1.90 to $16.51 a barrel on the New York Mercantile Exchange, roaring back from last week’s slide below $13--a nine-year low--after leading oil exporters said they would reduce production in order to boost sagging prices.

Ralph Acampora, director of technical research at Prudential Securities, said the stock market could see some near-term softness because of rising oil prices, weak transportation stocks and political uncertainty in Russia.

But he and many other analysts believe the market’s momentum is so strong that it will take a bigger blow than those to trigger a significant pullback.

While stocks were modestly lower Monday overall, the bond market showed almost no reaction to higher oil prices, despite the inflationary implications.

Bond yields were mostly unchanged, with the 30-year Treasury bond ending at 5.89%, up from 5.88% on Friday.

Among Monday’s highlights:

* Many energy stocks rallied as crude prices jumped. Among oil companies, Exxon rose 88 cents to $68, Atlantic Richfield rose $1.50 to $81.88, Unocal gained $1.13 to $41.38, Oryx Energy jumped $1.44 to $27 and British Petroleum surged $2.38 to $92.

Among oil field services stocks, Halliburton rocketed $3.63 to $51.75 and Schlumberger soared $4.56 to $78.13.

* On the downside, airline stocks fell on prospects of higher fuel costs. Southwest Airlines dropped $1.75 to $28.38 and US Airways lost $2.56 to $70.88. The Dow transports index slid 2.2% to 3,506.94.

* Walt Disney slumped $4 to $103. A Barron’s magazine story said Disney’s reported profit in the last five quarters was enhanced because of an undisclosed reserve of as much as $2.5 billion. Without the reserve, the costs and expenses incurred after its $19-billion purchase of Capital/Cities ABC Inc. would have resulted in Disney generating a 10% profit gain last year, far below the 25% reported, Barron’s said.

* Bank stocks were broadly lower in profit-taking, with J.P. Morgan down $3.81 to $135 and First Chicago/NBD down $2.31 to $89.19.

* The tech sector was helped by a Morgan Stanley analyst’s report raising earnings estimates for Lucent Technologies. Lucent surged $3.81 to $124.

In foreign trading, the Mexican and Venezuelan stock markets surged on news of the agreement by those countries and Saudi Arabia to cut back oil production. Higher oil prices could help those economies. Mexico’s main stock index surged 2.5% to 5,042.08; Venezuela’s gained 3.8%.