Stocks Rebound During Session as Oil Declines
Encouraged by a sharp drop in oil prices, Wall Street rebounded from its lows Tuesday and closed with just narrow losses on the major indexes.
Early in the day, price speculation and supply concerns drove oil to a new intraday high of $54.45 a barrel. But in what analysts suggested was an overdue correction, the price retreated to close at $52.51, down $1.13 from Monday.
The drop in oil also allowed investors to enjoy positive earnings from Johnson & Johnson, as well as a fairly good outlook from Merrill Lynch, even though revenue at the brokerage was lower than expected.
The Dow Jones industrial average lost 4.79 points, or 0.1%, to 10,077.18. The Standard & Poor’s 500 index dropped 2.55 points, or 0.2%, to 1,121.84. The Nasdaq composite index fell 3.59 points, or 0.2%, to 1,925.17.
About eight stocks declined for every seven that advanced on the New York Stock Exchange.
Traders said that after five straight days of record-high closing prices for oil futures, the decline in crude prices was a relief on Wall Street.
“I think this market is keyed in on oil and is ready to go if oil drops,” Bill Groenveld, head trader for VFinance Investments. “As soon as we see any relief in oil, and who knows when that will happen, I think the market starts to move north if there’s no earnings surprises this time around.”
In other market highlights Tuesday:
* U.S. Treasury yields, which plummeted Friday on news of weaker-than-expected U.S. employment growth in September, continued to fall. (The bond market was closed Monday for Columbus Day.) Traders said the soft job market and higher gasoline prices have again called into question recent upbeat economic forecasts from the Federal Reserve.
“We believe that a renewed slowing in U.S. economic growth likely lies ahead,” economists at Morgan Stanley said in a report.
The yield on the 10-year Treasury note slipped to 4.10% from 4.13% on Friday.
* After the market closed, semiconductor giant Intel reported quarterly earnings of 30 cents a share, including a tax benefit. That was slightly better than what analysts had expected. The stock shot up as high as $21.02 in extended trading, after falling 33 cents to $20.28 in regular trading.
Other semiconductor stocks also were down in regular trading. Philips, Europe’s third-biggest chip maker, said it expected semiconductor sales to stagnate this quarter as demand waned for DVD players and mobile phones. Its U.S. shares declined 78 cents to $22.79.
Texas Instruments, the largest maker of microchips that run mobile phones, retreated 59 cents to $21.30, and National Semiconductor lost 40 cents to $15.23.
* Johnson & Johnson gained $1.46 to $56.82 after beating both revenue and earnings estimates for the third quarter. Prescription drug and over-the-counter skin care sales helped boost revenue.
* State Street, the world’s largest institutional fund manager, fell $2.69, or 6.1%, to $41.16, for the second-biggest decline in the S&P; 500. Profit excluding some costs was 55 cents a share in the third quarter. On that basis, results missed the 65-cent average analyst estimate. But mutual fund manager Janus Capital Group, hurt by the improper-trading scandal, added 97 cents, or 7.1%, to $14.60, for the largest advance in the S&P; 500. The company said assets under management increased 1.9% in September to $130.2 billion.
* Gannett, publisher of USA Today and other newspapers, lost $1.75 to $83.25 after its third-quarter earnings missed Wall Street expectations by a penny a share. Media company Tribune, owner of the Los Angeles Times, fell 23 cents to $42.82, and New York Times sank 39 cents to $38.76.
* Travelzoo, an online travel-offer company, shot up $6.47 to $63.35 after beating Wall Street profit estimates by 4 cents a share in the quarter. A year ago the New York-based company’s shares were trading at about $5.
* NCR jumped $3.08 to $52 after the maker of automated teller machines boosted its forecast for full-year profit, excluding some items, to $1.40 to $1.45 a share, from as much as $1.25.
* General Motors was up 38 cents at $41.80. According to media reports, the carmaker will cut 12,000 jobs in Europe -- 1 in 6 of its workers there -- as part of a broad restructuring of its operations.
* Southland-based utility giant Edison International gained 95 cents to $27.75, its highest closing price since 2000. The company will hold a meeting with analysts today in New York.
