Enron, Mideast Weigh on Stocks
Stocks closed broadly but modestly lower Monday, pressured by concerns over Enron’s Chapter 11 bankruptcy filing and the latest wave of violence in the Mideast.
Crude oil prices rose above $20 a barrel for the first time since Nov. 13 on fears the deepening conflict between Israel and the Palestinians could threaten oil supplies.
On Wall Street, the Dow Jones industrial average fell 87.60 points, or 0.9%, to 9,763.96, while the Nasdaq composite gave up 25.68 points, or 1.3%, to 1,904.90.
The blue-chip Standard & Poor’s 500 index fell 0.8% to 1,129.90, its fourth decline in five sessions.
Losers outnumbered winners 3 to 2 on the New York Stock Exchange and 23 to 13 on Nasdaq, though in relatively slow trading.
Stocks fell in early trading, then pulled up from their lows in the afternoon.
The latest U.S. economic data suggested the picture may be brightening somewhat, but that failed to stir much new buying interest in the stock market.
Still, “it’s an amazing market that it has held up this well, given that it was thrown a lot of bad news with everything in the Middle East and Argentina,” Tom Schrader, head trader at Legg Mason Wood Walker in Baltimore, told Bloomberg News.
In commodities trading, worries about a further escalation in the Israeli-Palestinian conflict helped push near-term crude oil futures up 65 cents to $20.09 a barrel in New York. Analysts cited fears that terrorists might try to disrupt oil shipments from the Middle East.
Concern about Enron’s bankruptcy helped send many bank and brokerage stocks lower, though analysts said major banks’ losses on Enron debt are likely to be smaller than some investors fear.
In the bond market, long-term Treasury yields continued to ease. Many economists say the Federal Reserve will cut its key short-term rate, now 2%, to as low as 1.5% when policymakers meet Dec. 11. On Monday, Fed Chairman Alan Greenspan had lunch with President Bush.
The 10-year T-note yield fell to 4.69% from 4.75% Friday, and now is the lowest since Nov. 14. The five-year T-note yield eased to 4% from 4.06%.
Among Monday’s highlights:
* Enron’s bankruptcy helped pull J.P. Morgan Chase down $1.17 to $36.55 and Citigroup down 99 cents to $46.91.
Among power companies, former Enron suitor Dynegy dived $3.18 to $27.17, Calpine slumped $3.06 to $18.50, and Reliant Resources lost 47 cents to $15.80.
* Oil and natural-gas stocks rallied as crude prices rose. ChevronTexaco gained $1.44 to $86.45, Apache rose $1.07 to $47.06, and Unocal jumped $1.12 to $34.01.
* Major technology stocks were mixed. Chip maker Micron Technology rose $1.40 to $28.56, and Microsoft added 56 cents to $64.77.
But software giant Oracle slipped 33 cents to $13.70 after Merrill Lynch lowered its earnings and revenue estimates for the company. The brokerage cited a challenging environment for software spending.
* Internet stocks pulled back. Ebay fell $1 to $67.07, Amazon.com lost 83 cents to $10.49, and AOL Time Warner slid $1.32 to $33.58.
* Airline stocks were mostly lower as oil prices rose. Delta fell 91 cents to $28.07, United parent UAL lost 57 cents to $16.30, and Northwest gave up 56 cents to $17.36.
* Retail shares struggled. May Department Stores lost $1.31 to $34.53, Kohl’s slid $1.45 to $66.40, and Sears was off $1.16 to $44.35.
* Household International fell $2.60 to $56.39. The consumer-finance company may be using accounting practices to obscure loan losses, Barron’s magazine said, citing analysts.
