Stocks End Session Mostly Lower
Wall Street struggled through an indecisive session Thursday, finishing mostly lower as investors grappled with higher energy costs, the prospect of declining earnings growth and a slower economy.
Oil prices were volatile throughout the session, and investors remained jittery about the possibility of economic growth curtailed by high gasoline and heating oil prices. A barrel of crude settled at $63.27, up 2 cents, on the New York Mercantile Exchange after falling as low as $62.25.
The Conference Board’s latest reading of its index of leading economic indicators, a forecast of future economic activity, was somewhat encouraging with its prediction of modest growth. The index posted a 0.1% gain in July, in line with many economists’ estimates but a sharp drop from June’s 1.2% increase.
With mediocre economic data and little change in oil, the meandering trading session was unsurprising. However, the lack of a major sell-off in recent days was cause for optimism, some analysts said.
“The market is behaving like you’d expect it to,” said Jack Caffrey, equities strategist at J.P. Morgan Private Bank. “Certainly oil is going to be volatile, but earnings remain strong and the economic data is OK. I think we can expect a reasonable reacceleration of the market in the second half.”
The Dow Jones industrial average rose 4.22 points, or 0.04%, to 10,554.93.
Broader stock indicators were modestly lower. The Standard & Poor’s 500 index slipped 1.22 points, or 0.1%, to 1,219.02, and the Nasdaq composite lost 9.07 points, or 0.4%, to 2,136.08.
The Russell 2,000 index of smaller stocks fell 0.6%.
About 3 stocks declined for every 2 that advanced on both the New York Stock Exchange and Nasdaq.
Bond yields sank, one day after inflation worries prompted a run-up. Bond yields fall as their prices rise.
Traders were hard pressed to find a reason for the bond market’s turnabout, with some suggesting that yields may continue to see-saw until there is reason to second-guess the outlook for further interest rate hikes by the Federal Reserve.
“There’s not any new data coming out that is changing our fundamental view on the Fed or the economy,” said Joseph Di Censo, a fixed-income strategist at Lehman Bros. “Aside from a major shift in sentiment on the pace of tightening, there’s not much that is going to move this market.”
The yield on the benchmark 10-year Treasury note fell to 4.20% from 4.27% on Wednesday.
The two-year T-note fell to 3.99%, down from 4.04% on Wednesday. It has pulled back from 4.15% on Aug. 8.
The latest report on unemployment was disappointing for some stock investors. The government said the number of people making first-time unemployment claims rose to 316,000 last week, up from 310,000 the previous week and higher than economists expected.
Yet despite high energy prices and their growing effect on consumer spending, many analysts remain bullish and have been cheered by the market’s relatively minor losses of late, noting that they came on light volume.
“Pullbacks are healthy, and with it coming on light volume, it just tells you that, yeah, people are worried, but they’re not bailing out entirely,” said Bill Groenveld, head trader at VFinance Investments.
In other market highlights:
* Google pressured the technology sector after the company announced it would sell as much as $4 billion in a secondary stock offering. The company said it would use the money for general purposes as well as potential acquisitions, though Google added that it had no particular takeover in mind. Google fell $5.11 to $279.99 on the news.
Among other tech issues, Intel retreated 21 cents to $25.88, Baidu.com fell $3.33 to $82.48, Yahoo slid 3 cents to $34.36 and Apple Computer declined 85 cents to $46.30.
* Six Flags, the No. 1 regional theme-park operator, climbed $1 to $6.49. Daniel M. Snyder, the company’s top investor and owner of the Washington Redskins football team, announced after the market closed Wednesday that he wanted to triple his stake to 35% and oust three of seven board members. The stock has plunged 85% since May 2001. Six Flags said it would evaluate Snyder’s plans.
* Hot Topic, which sells clothing for teenagers, tumbled $1.67 to $14.14. The company said after the bell Wednesday that it expected third-quarter per-share profit of 15 cents to 18 cents. Analysts expected 27 cents in a Thomson Financial survey.
* Morgan Stanley slid 55 cents to $52.30, a day after Chief Executive John Mack announced that the world’s largest securities firm would keep its Discover credit card business, abandoning a spinoff plan hatched four months ago by his predecessor, Philip Purcell.