Rising Energy Prices Weigh Down Stocks
Uneasy investors sent stocks mostly lower Tuesday as oil prices climbed above $51 a barrel, prompting fresh worries that rising energy costs would curb consumer spending and corporate profits.
The selling on Wall Street was relatively subdued, particularly compared with other oil-related declines in the recent past.
Nonetheless, the jump in crude futures in New York to $51.09 a barrel, up $1.18 for the day, triggered some investors to collect profits after the market’s substantial gains in four of the last five sessions.
The Dow Jones industrial average fell 38.86 points, or 0.4%, to 10,177.68.
Broader stock indicators were narrowly mixed. The Standard & Poor’s 500 index was down 0.69 point, or 0.1%, at 1,134.48, while the Nasdaq composite index gained 3.1 points, or 0.2%, to 1,955.50.
Declining issues barely outnumbered advancers on the New York Stock Exchange.
The continuing run-up in oil is deepening worries that the economic “soft patch” that plagued the economy early in summer might continue through the fourth quarter -- a time of year when stocks typically rally.
“I think there’s some money that really wants to come into the market, but there’s some hesitancy out there because of these uncertainties,” said Michael Murphy of Wachovia Securities in Baltimore.
The monthly job creation report from the Labor Department is always closely watched on Wall Street, but with recent economic data pointing to uncertainty in the recovery, the September report, to be released Friday, will take on even more importance, analysts said.
Adding to investors’ concerns Tuesday was a disappointing report from the Institute for Supply Management, which said its index of activity in the economy’s service sector index fell in September, though it still indicated the sector was expanding.
Wall Street also is awaiting a barrage of third-quarter earnings reports that could provide more clues about the economy’s health.
In other market highlights:
* Computer-related shares, among the worst performers this year, bucked Tuesday’s downtrend. Microsoft rose 26 cents to $28.38, Intel gained 19 cents to $21.32 and FileNet jumped $3.99 to $23.12.
PeopleSoft surged 63 cents to $22.83 after board member Steven Goldby said he was willing to discuss a takeover by Oracle, raising the possibility PeopleSoft’s board would end its opposition. Oracle rose 34 cents to $12.21.
* Pulte Homes continued its slide, falling $3.88 to $52.45. The stock lost $5.30 on Monday on reports, later confirmed, that Pulte was cutting prices on homes in the Las Vegas area because of soft demand. Other Las Vegas-area builders marched down with Pulte, with KB Home dropping $1.19 to $79.70 and D.R. Horton shedding 69 cents to $30.22.
* Shares of American International Group fell for a second day, losing $1.99 to $66.50. The 2.9% drop was the steepest in the Dow index. The company, threatened with a lawsuit by regulators for allegedly helping a client hide bad loans, may be sued by the Securities and Exchange Commission for making “false and misleading” statements about the probe.
* The Amex airline index shed 2.9% as oil prices advanced. Delta Air Lines lost 20 cents to $3.55 and America West dropped 49 cents to $5.06.
Despite the slide in airline issues, the Dow transportation index gained 16.98 points, or 0.5%, to 3,335.60, its highest level since 1999. The 20-stock index was bolstered by gains in trucking shares including CNF, up $2.78 to $44.63, and Yellow Roadway, up 57 cents to $47.52.
* Chiron tumbled $7.44 to $37.98, the steepest drop in the S&P; 500, after saying it would not sell any flu shots in the U.S. this season because British regulators shut down a manufacturing plant. But MedImmune climbed $1.41 to $25.78. The company plans to ship as many as 2 million doses of its FluMist inhaled vaccine this year.