Stocks Mixed on Profit Taking
Investors turned to profit taking Monday, leaving stocks mixed after nearly two weeks of solid gains.
Another drop in oil prices limited the market’s losses. The euro, meanwhile, declined against the dollar after the European Central Bank’s president said its rally to a record high last week was unwelcome. A high euro puts pressure on European exports.
Last week’s robust jobs report, meanwhile, cemented expectations that the Federal Reserve would raise its benchmark interest rate a quarter percentage point when it meets Wednesday, and probably again in December.
That pushed U.S. Treasury bond yields to a one-month high, with the 10-year note rising to 4.22% from 4.17% on Friday.
On Wall Street, traders said some selling was expected in the wake of the recent run-up, which was charged by last week’s reelection of President Bush and the softening of oil prices.
“We had such a beautiful confluence of events last week, with a smooth election, with Bush winning a second term and with Friday’s outstanding jobs report,” said Joseph Keating, chief investment officer at AmSouth Asset Management. “Now we’re seeing a very healthy pause as investors start to plan for the long term, as opposed to last week’s knee-jerk reactions.”
The Dow Jones industrial average gained 3.77 points, or 0.04%, to 10,391.31. It was the fourth straight gain for the Dow and the ninth in the last 10 sessions.
Broader stock indicators were mixed. The Standard & Poor’s 500 index was down 1.28 points, or 0.11%, at 1,164.89, and the Nasdaq composite index inched up 0.31 point, or 0.02%, to 2,039.25.
Declining issues outnumbered advancers by nearly 3 to 2 on the New York Stock Exchange.
Crude futures tumbled as investors, reassured by last week’s oil inventory figures, grew more confident that the United States would have enough heating oil for the winter. A barrel of crude dropped 52 cents to $49.09 in New York trading.
“I think this is a good day, even if the market isn’t up,” said Hugh Johnson, chief investment officer at First Albany Corp. “So long as oil remains stable at or near these current levels, the market’s likely to manage ... the way it has so well today.”
Among Monday’s market highlights:
* EBay gained $4.01 to $103.69 after J.P. Morgan Securities added the world’s largest Internet auctioneer to its “focus list.” The expansion of EBay’s PayPal e-mail payment service overseas may boost sales growth by 37% in fiscal 2005 and 31% in 2006, a J.P. Morgan analyst wrote.
* U.S. Steel rose $2.56 to $42.97 on a Barrons report that its shares may be undervalued. Analysts expect it to earn $7.35 a share this year and use cash from record steel prices to buy back stock.
* Taser International surged $7.63 to $54.12 after the Transportation Safety Administration approved the company’s non-lethal stun weapons for use onboard Korean Air planes.
* Energy stocks sank amid falling oil prices. Valero Energy lost $1.58 to $41 after a Merrill Lynch analyst lowered his rating on the stock, saying refining revenue growth could weaken as U.S. inventories of petroleum products increase and demand slows in the winter months.
ConocoPhillips, the largest U.S. refiner, slipped $1.59 to $86.77, Occidental lost 64 cents to $57.36 and ChevronTexaco dropped $1.17 to $53.36.
“People are looking at oil prices thinking they topped out,” said Robert Drust, managing director of listed trading at Wedbush Morgan Securities in Los Angeles. “Oil stocks will be under pressure.”
* Pixar Animation Studios fell $5.20 to $79.25 despite scoring a $70-million opening weekend with its new film, “The Incredibles.” Deutsche Bank downgraded Pixar shares, saying they are overvalued.
* The euro traded at $1.291 late Monday, down from $1.296 on Friday.
