Oil Prices Fall but Stocks Are Little Changed
U.S. stock indexes were little changed Friday for a second session, despite a sharp decline in oil prices.
In other trading the dollar continued to slide against the yen, and gold prices dropped for a fourth day.
Near-term crude oil futures in New York slumped $1.93, or 3.2%, to $58.06 a barrel, the lowest since Nov. 30, amid projections of warmer weather in the midsection of the country.
Higher-than-normal temperatures will sweep into the Great Plains and parts of the Midwest by Dec. 29, according to the National Weather Service.
Oil and natural gas prices had jumped in the last two weeks as frigid weather in the Midwest raised concerns about supplies.
For now, the weather shift “has taken the steam out of natural gas and oil as well,” said Aaron Kildow, a broker at Prudential Financial Derivatives in New York.
What’s more, U.S. inventories of crude, heating oil and natural gas last week were above the five-year averages for this time of year, according to government data.
But Wall Street didn’t take much comfort Friday in lower energy prices. The Dow Jones industrial average ended with a loss of 6.08 points, or less than 0.1%, to 10,875.59.
Broader indexes also languished. The Standard & Poor’s 500 fell 3.62 points, or 0.3%, to 1,267.32. The Nasdaq composite lost 8.15 points, or 0.4%, to 2,252.48.
Losers narrowly outnumbered winners on the New York Stock Exchange and on Nasdaq. Volume was heavy, inflated by trading related to the quarterly expiration of key stock index futures and options.
Still, the Dow gained 0.9% for the week and the S&P; 500 was up 0.6% for the period, after two losing weeks. The market got a lift on Tuesday and Wednesday, after the Federal Reserve raised its key short-term interest rate to 4.25% from 4% but also hinted that it might be nearly finished tightening credit.
Some analysts say the stock market’s fourth-quarter rally may have gone as far as it can.
“The market is going to trade sideways here,” said Franklin Morton, a money manager at Ariel Capital Management in Chicago. “We had a rally earlier in the quarter and the market’s got to sort through some of these issues and get a better sense of what 2006 looks like.”
Some technology shares and smaller stocks that have been hot performers this year were hit by profit-taking this week. Apple Computer fell $1.07 to $71.11 on Friday and $3.22 for the week.
The tech-heavy Nasdaq index lost 0.2% for the week. An S&P; index of 600 smaller stocks fell 0.6% on Friday and 1.1% for the week after hitting a record high Wednesday.
“People are just going to protect their gains” as the year ends, said Tim Heekin, head of trading at Thomas Weisel Partners in San Francisco.
For the year to date, the Dow is up just 0.9%, but that understates the performance of the broader market. The S&P; 500 is up 4.6%, the Nasdaq is up 3.5%, the NYSE composite has gained 7.8%, the S&P; small-stock index is up 8.1% and an S&P; mid-sized stock index is up 11.9%.
The average domestic stock mutual fund is up 7.8% this year, according to Morningstar Inc.
Profit-taking also slammed gold this week. Near-term futures hit a 24-year high of $528.40 an ounce Monday. By Friday’s close the price was $503.40, down $23.60, or 4.5%, for the week.
A steep slide in the dollar against the yen this week also was attributed to profit-taking by speculators, who had helped push the dollar to two-year highs last week.
On Friday the buck ended at 115.67 yen, down 0.62 for the day and down from 120.64 a week ago. It was the yen’s biggest weekly gain in six years.
The euro rose to a six-week high of $1.201 on Friday from $1.197 on Thursday.
The rally in foreign currencies is boosting U.S. investors’ returns on foreign-stock mutual funds. The average Japanese stock fund rose 3.1% this week.
In the bond market the 10-year Treasury note yield, a benchmark for mortgage rates, ended at 4.44%, down from 4.46% on Thursday and 4.53% a week ago. The yield hit a high for the year of 4.66% on Nov. 4.
