Stocks Sink Again as Oil Rises
The stock market fell for a fourth straight session Monday as oil prices crept closer to the $50 mark.
Technology stocks again bore the brunt of the decline, leaving the Nasdaq composite index down 7.7% since the start of the year and nearly wiping out the last of its 2004 gain.
Nasdaq slid 25.57 points, or 1.3%, to end at 2,008.70.
The Dow Jones industrial average gave up 24.38 points, or 0.2%, to 10,368.61, while the Standard & Poor’s 500 lost 4.12 points, or 0.4%, to 1,163.75.
Falling stocks outnumbered winners by more than 2 to 1 on Nasdaq and by 3 to 2 on the New York Stock Exchange.
The market held up well for most of the session, then slumped in the final 90 minutes of trading -- a pattern that has been common this year.
“It’s a little concerning that you see the market try to rally in the morning and then fail in the afternoon,” said Conrad Herrmann, who manages the Franklin Flex Cap Growth Fund in San Mateo, Calif.
Analysts said some investors have been spooked by climbing oil prices. Near-term oil futures in New York gained 28 cents to $48.81 a barrel on Monday, the highest since Nov. 30. The price is up 12% this year.
Cold weather in the East has raised consumption of heating oil, triggering fresh concerns about energy supplies.
Also, the Organization of the Petroleum Exporting Countries has cut output by 800,000 barrels a day this month from December’s average, according to a preliminary estimate by consulting firm PetroLogistics Ltd., Bloomberg News reported.
“The 800,000 barrels is a substantial cut, especially with demand rising,” said Jason Schenker, an analyst with Wachovia Corp. in Charlotte, N.C.
OPEC ministers will meet Sunday to discuss supply and demand issues.
Another problem for stocks is that fourth-quarter corporate earnings reports, and forecasts for 2005 results, haven’t given investors much to rave about, analysts say. Earnings generally have beaten estimates, but profit growth overall is expected to decelerate this year.
“That makes it a more challenging environment” for equities, Herrmann said.
Some market pros say the slow-motion sell-off this month is nothing more than overdue profit taking, after stocks zoomed in November and December. The Iraqi elections, set for Sunday, also may be giving investors pause, some say.
The pullback in blue-chip indexes has been relatively mild: The Dow and the S&P; 500 have lost just under 4% year to date.
But if the market finishes January in the red it could be taken as a bad sign for the rest of the year because January often signals the full-year trend.
The Dow already has given back all of last year’s 3.2% gain. If Nasdaq dips below 2,003.37 it will erase its entire 8.6% gain for 2004.
Among the day’s highlights:
* The technology sector was hurt after European chip-making giant Infineon Technologies said sales and earnings would decline in the current quarter because of weaker demand.
Infineon’s U.S.-traded shares lost 37 cents to $8.97, Intel dropped 43 cents to $21.99 and Micron Technology gave up 35 cents to $10.06.
In the software sector, Autodesk fell $3.74 to $27.58. Banc of America Securities downgraded the stock to “sell” on concerns about slowing growth.
* Internet-related shares were hit. Travelzoo, which provides services to the online travel industry, plunged $18.05, or 25%, to $55.33 after saying the Securities and Exchange Commission was examining trading in its shares, including transactions by its chief executive.
Among other Net shares, Google slid $7.56 to $180.72, EBay fell $3.68 to $82.37 and Yahoo lost $1.37 to $33.93.
* Airlines slumped as oil prices rose. Alaska Air dropped $1.20 to $27.66, Delta was off 59 cents to $4.41 and Continental gave up 27 cents to $8.73.
The XAL index of 10 airline shares is down 27% this year.
* On the plus side, American Express helped to support the Dow index, rising 67 cents to $52.60 after reporting a 17% rise in fourth-quarter earnings.
Energy stocks also were strong. Exxon Mobil gained 69 cents to $51.13 and Eni rallied $1.37 to $121.74.
* Treasury bonds continued to benefit from the stock market’s woes. The yield on the 10-year T-note fell to a six-week low of 4.12% from 4.14% on Friday.
