Stocks Fall on Profit Taking
Investors locked in profits after a week of gains Friday, sending stocks lower even as oil prices fell for the fifth day in a row.
With first-quarter earnings season beginning in earnest next week, and with government reports coming out on the nation’s trade deficit, retail sales strength and industrial production, many investors decided to take a pause while they were ahead.
“Why wouldn’t you take the money off the table, especially after seeing the market go down as low as it did last month?” said Brian Williamson, an equity trader at the Boston Company Asset Management. “I think some people are taking some profits.”
The Dow Jones industrial average fell 84.98 points, or 0.8%, to 10,461.34.
Broader stock indicators also lost ground. The Standard & Poor’s 500 index was down 9.94 points, or 0.8%, at 1,181.20, and the Nasdaq composite lost 19.44 points, or 1%, to 1,999.35.
Despite Friday’s losses, all three indexes finished the week higher for the first time since March 4, buoyed by the largest weekly decline in oil prices since December. For the week, the Dow rose 0.55%, the S&P; 500 climbed 0.71% and Nasdaq gained 0.73%.
Crude oil futures dropped for the fifth day in a row Friday, although investors seemed skeptical that oil futures may, at least in the short term, have hit a ceiling. A barrel of light crude settled at $53.32, down 79 cents, in New York trading.
“Oil prices and interest rates continue to dominate,” said Michael Sheldon, a market strategist at Spencer Clarke. “We may need to see oil fall further before the markets get comfortable, and inflation is still an issue.”
Bonds traded in a narrow range, with the yield on the 10-year Treasury note falling slightly to 4.47% from 4.48% on Thursday. The dollar fell against most major currencies after remaining higher most of the session, and gold prices fell as well.
In other market highlights:
* USF sent transportation stocks reeling after the trucker, which is being acquired by Yellow Roadway, said profit fell by more than half amid a drop in shipments to auto-industry customers. The Dow Jones transportation average had its biggest loss in more than two years, tumbling 3.3%.
USF dropped $2.83 to $45.67. Yellow Roadway, the biggest U.S. trucker, slid $4.69 to $54.45. CNF, owner of the largest U.S. regional trucker, retreated $3.91 to $42.02.
* U.S. Steel lost $2.13 to $48.22. The steel industry is facing “declining prices, a reversal in earnings momentum, reduced automotive demand and a potential global supply demand imbalance caused by lower-than- anticipated Asian demand,” a CIBC World Markets analyst wrote. Nucor, the No. 2 domestic steelmaker after U.S. Steel, slipped $2.03 to $55.27.
* Time Warner advanced 9 cents to $17.97 and Comcast lost 21 cents to $33.07 in the wake of their $17.7-billion bid in cash and stock for financially ailing Adelphia Communications. The deal is subject to approval by a U.S. Bankruptcy Court judge.
* General Motors lost $1.03 cents, or 3.4%, to $29.50 for the biggest slide in the Dow average. A “severe profit deterioration” and worse-than-expected U.S. market share will lead to a “significant restructuring” of GM’s North American operations that could cost up to $5 billion, a Deutsche Bank analyst wrote.
* Cardinal Health fell $1.30 to $55.53 after the drug distributor received a subpoena from New York Atty. Gen. Eliot Spitzer in what may be an industrywide inquiry into purchases from other wholesalers.
* ShopKo Stores climbed $2.99, or 13%, to $26.02 after private equity firm Goldner Hawn Johnson & Morrison announced its $1-billion takeover of the regional retailer.
