Wall Street Falls Despite Some Upbeat Earnings
Stocks ended broadly lower Tuesday despite some upbeat earnings reports and another drop in crude oil prices.
Two sectors that had been recent investor favorites -- health maintenance organizations and steel -- led the selling, further undermining bullish sentiment, some analysts said.
“It feels like a malaise in the market,” John O’Donoghue, a trader at Credit Suisse First Boston in New York, told Bloomberg News.
The Dow Jones industrial average slid 58.70 points, or 0.6%, to 9,897.62, taking back nearly all of its gains over the previous two sessions.
The Standard & Poor’s 500 index dropped 10.79 points, or 1%, to 1,103.23, and the Nasdaq composite was off 13.62 points, or 0.7%, to 1,922.90.
Losers topped winners by almost 2 to 1 on the New York Stock Exchange and by 3 to 2 on Nasdaq. Trading was heavy.
The market rallied at the outset, buoyed by strong earnings reports from IBM and Texas Instruments, which issued results after trading ended Monday.
However, sellers quickly got the upper hand, and the market drifted lower the rest of the day.
Near-term crude oil futures in New York, which hit record highs Friday, lost 38 cents to $53.29 a barrel after falling $1.26 on Monday.
But persistent supply worries and an attack on a key Iraqi pipeline lifted oil from a session low of $52.59 on Tuesday. Also, natural gas futures rose to their highest level since January on concerns that a cold U.S. winter could drain gas supplies.
News that New York Atty. Gen. Eliot Spitzer’s probe of insurance industry practices had spread to life and health insurance companies pounded HMO stocks in particular. The shares had been among the market’s best performers this year.
Steel stocks, another recently hot sector, were slammed after Indiana-based producer Steel Dynamics reported sharply higher third-quarter earnings but said prices may be “softening somewhat.” The stock tumbled $4.14 to $29.66. It reached a record high of $41.92 on Oct. 6.
In economic news, the Labor Department said its consumer price index rose 0.2% last month. The core rate -- excluding food and energy costs -- was more worrisome, up 0.3%, the biggest increase since April.
“I don’t think you can sustain this constant bombardment of energy prices, and higher food prices too, and not have it bleed through to the consumer” via other prices, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.
Treasury bond yields barely budged on the inflation report. But the news rattled some currency traders. The dollar fell to a three-month low against the yen and a seven-month low against the euro. In New York, the buck ended at 108.41 yen, and the euro was at $1.252.
Among Tuesday’s market highlights:
* Steel stocks falling sharply included Reliance Steel, off $1.83 to $33.72; U.S. Steel, down $1.85 to $32.88; Nucor, off $4.35 to $39.45; and Wheeling-Pittsburgh, down $3.51 to $26.48.
* Other commodity-related shares also were under pressure. Phelps Dodge lost $2.79 to $81.06, Weyerhaeuser dropped $1.61 to $59.94, Potash was off 84 cents to $61.12 and Stillwater Mining fell 96 cents to $12.01.
* Warnings of earnings shortfalls hammered educational toy maker LeapFrog Enterprises, which slumped $6.21 to $11.99, and office products distributor Boise Cascade, which fell $3.77 to $30.15.
* On the plus side, strong third-quarter earnings reports lifted IBM, up $3.45 to $89.37; Texas Instruments, up $1.46 to $22.55; aerospace parts maker Parker Hannifin, up $5.12 to $68.53; tool maker Stanley Works, which gained $3.98 to $45; and brokerages Jefferies Group, up $3.35 to $37.35, and E-Trade, up 32 cents to $11.96.
* Bank stocks were weak. J.P. Morgan Chase fell $1.02 to $37.98, Comerica slid $2.33 to $60.69 and Golden West Financial lost $2.30 to $111.55.
* Among Southland issues, Intermix Media jumped 35 cents to $2.85. The website operator, formerly known as EUniverse, said it was notified by the Securities and Exchange Commission that the agency had terminated a previously disclosed informal investigation of the company. The probe began in May 2003 after the company said it would restate its financial results.
Intermix also said its stock was accepted for listing on the American Stock Exchange. The shares now trade in the electronic over-the-counter market.
