Stocks Decline as Oil Prices Drop

Stocks ended mostly lower Monday as a tumble in oil prices prompted investors to sell energy shares, and mild profit-taking clipped other sectors.

The dollar sank to another record low against the euro -- its seventh this month -- in light trading. Treasury bond yields shot up on the dollar’s weakness.

Some insurance, hotel and travel-related stocks fell as investors reacted to the devastation in Asia from Sunday’s earthquake-generated tsunami, which could be one of the costliest disasters in history, though the economic effect for the United States appeared to be minimal.

And with trading volume very light in the week between the Christmas and New Year holidays, analysts said there was little to be divined from Wall Street’s initial reaction.

“Trading volumes are so light, what with the holidays, you can’t really put any meaning behind what’s going on,” said Bill Groenveld, head trader for VFinance Investments. “Low volume means everything’s magnified. Next week we’ll get a much better idea of where things are going.”

The Dow Jones industrial average fell 50.99 points, or 0.5%, to 10,776.13.

Broader stock indicators saw modest losses. The Standard & Poor’s 500 index was down 5.21 points, or 0.4%, at 1,204.92, and the Nasdaq composite index lost 6.40 points, or 0.3%, to 2,154.22.

Declining issues outnumbered advancers by about 8 to 5 on the New York Stock Exchange.

The dollar weakened across the board Monday, but especially against the euro, which hit a new high of $1.362 in New York trading, up from $1.355 late last week.

Some analysts say the euro could hit $1.40 soon, boosted by speculation that the U.S. trade and budget deficits will continue to grow.

However, Chris Callander, a senior foreign exchange analyst at CMC Group in New York, cautioned that Monday’s euro move had been exaggerated by low holiday-week volumes.

The dollar’s weakness helped push Treasury yields higher as some investors sold U.S. bonds and put their money in euro-denominated debt, dealers said.

The yield on the benchmark 10-year Treasury note rose to 4.29% from 4.21% on Thursday. (U.S. markets were closed Christmas Eve.)

In other market highlights:

* A forecast of warmer weather in the East helped push crude oil futures down $2.86 a barrel to $41.32 in New York trading and sent natural gas futures to a three-month low.

Energy-related stocks fell across the board. Exxon Mobil lost $1.09 to $50.88, ChevronTexaco declined 66 cents to $52.01, Baker Hughes fell $1.01 to $42.13 and Southwestern Energy tumbled $2.60 to $48.70.

* Some insurance and travel stocks were lower as Wall Street tried to determine the economic effect of the Asian earthquake and tsunami. Dow component American International Group lost 58 cents to $65.71, even though the insurance company said its losses from the disaster would be minimal. Four Seasons Hotels fell as low as $80.95 but rebounded to end up 15 cents at $83.20. Marriott International declined 44 cents to $62.80 and Beverly Hills-based Hilton Hotels slipped 5 cents to $22.51.

* Stock markets of countries hit by the tsunami were mixed. The Thai market fell 1%, but the Indonesian market gained 1.1%.

* Taylor Devices rocketed $4.27, or 172%, to $6.75. The North Tonawanda, N.Y.-based company makes fluid dampers designed to protect buildings and other structures by absorbing shock waves during earthquakes. Some investors were betting the company would see increased demand after the Asian quake.

* Wal-Mart edged up 24 cents to $52.79 after the retail giant said it expected December sales at stores open at least a year to be up about 2%, in line with previous estimates.

Other retail issues were mixed as investors sorted through differing estimates of the gain in holiday sales. Target added 81 cents to $51.31 and Federated Department Stores rose 30 cents to $55.54, but Limited Brands slipped 15 cents to $22.76 and Nordstrom was off 4 cents to $46.36.