Stocks Drop on Economic News
Wall Street opened 2005 with a loss Monday, as disappointing news on employment and construction spending prompted investors to sell some of last year’s best performers.
Exxon Mobil led energy shares lower as oil prices tumbled. Technology stocks, which rallied in the fourth quarter, dropped on an analyst downgrade of Sun Microsystems.
Investors “are reassessing their portfolio and taking profits in energy and tech, which both had very nice runs,” said Warren Koontz, who helps manage $10 billion at Loomis Sayles & Co. in Boston.
The Standard & Poor’s 500 index fell 9.84 points, or 0.8%, to 1,202.08, its biggest loss in three weeks. Energy shares accounted for more than a quarter of the index’s retreat. The Dow Jones industrial average slipped 53.58 points, or 0.5%, to 10,729.43.
The tech-heavy Nasdaq composite index dropped 23.29 points, or 1.1%, to 2,152.15.
Declining issues outnumbered advancers by more than 2 to 1 on the New York Stock Exchange.
As investors sold off stocks, they overlooked a sharp drop in crude oil futures, triggered by mild weather in the Northeast and reports of increased production. A barrel of light crude fell to $42.12, down $1.33, in New York futures trading.
Construction spending took an unexpected hit in November, falling 0.4% for the month, the Commerce Department said.
On top of that, the Institute for Supply Management’s employment index, which is calculated from a survey of 400 manufacturing companies, slid to 52.7 in December, from 57.6 in November. The reading was its weakest in a year, raising concerns about the economy ahead of the Labor Department’s December jobs report Friday.
“There were certainly aspects of the ISM report that were not comforting,” said Hugh Johnson of First Albany Corp. “But overall, when you look at the big picture, there is some argument that the real concern is the market moved too far, too fast in the fourth quarter, and I think you’re starting to see some sophisticated portfolio managers take money off the table.”
In other market highlights:
* The dollar gained against the euro as traders reversed bets that the greenback would extend its decline after reaching a record low of $1.362 against the euro last week. The euro fell to $1.348 from $1.355 on Friday. The dollar was mixed against other major currencies.
* Near-term gold futures in New York slumped $8.80, to $428.70 an ounce, losing appeal as the dollar rallied. Among gold-mining stocks, Barrick Gold fell 66 cents to $23.56 and Newmont Mining lost $2.05 to $42.36.
* Exxon Mobil, the Dow average’s second-best-performing stock last year, slid $1.17 to $50.09. Valero Energy dropped $2.34 to $43.06 and ChevronTexaco declined $1.61 to $50.90.
* Sun Microsystems fell 28 cents to $5.11 after an analyst at investment firm Sanford Bernstein said the stock was expensive after climbing more than 50% since August. Other tech shares lost ground, including Oracle, down 31 cents to $13.41.
* Google and Yahoo advanced after a Goldman Sachs analyst raised fourth-quarter revenue estimates. Google jumped $9.92 to a record $202.71. Yahoo gained 50 cents to $38.18.
