Stock Indexes Drift Lower
Stocks pulled back Monday as oil prices seesawed and investors took profits in some of the market’s recent leaders.
Yields on shorter-term Treasury yields rose to fresh four-year highs on expectations that the Federal Reserve would continue to tighten credit.
In a lackluster session overall, the Dow Jones industrial average lost 54.70 points, or 0.5%, to 10,596.48.
Share prices started the day with a modest rally, then drifted lower until the closing bell.
The broader Standard & Poor’s 500 index eased 4.65 points, or 0.4%, to 1,229.03. The Nasdaq composite index lost 13 points, or 0.6%, to 2,166.74.
Losers topped winners by 9 to 5 on the New York Stock Exchange and by a narrower margin on Nasdaq.
The S&P; and Nasdaq hit four-year highs Wednesday, boosted in part by investors’ optimism over generally upbeat second-quarter earnings.
The market fell Thursday, however, after China’s surprise news that it would allow its currency to rise slightly against the dollar and would begin pegging the currency’s value to a basket of major world currencies instead of solely to the dollar. The move raised concerns about foreign investors’ appetite for dollar-denominated securities.
Stocks rallied again Friday, and key indexes scored their fourth straight weekly gain.
On Monday, higher oil prices weighed on market sentiment, analysts said. Near-term crude futures rose 35 cents to $59 a barrel in New York, highest since July 13.
Another upturn in bond yields also soured the mood. The 10-year Treasury note yield ended at 4.25%, up from 4.22% on Friday.
The two-year T-note finished at 3.94%, up from 3.90% on Friday and the highest since 2001.
The improving U.S. economy is expected to keep pressure on the Fed to continue raising its benchmark short-term rate, now at 3.25%, analysts said.
U.S. interest rates also could face upward pressure if China slows its buying of Treasury securities, experts said.
“The market is still mulling the implications of the Chinese yuan revaluation,” said Nick Stamenkovic, a bond strategist at RIA Capital Markets Ltd. in Edinburgh, Scotland.
The dollar was little changed Monday against the euro and the yen.
Although quarterly earnings reports will be important for individual stocks this week, many investors may stay on the sidelines until the Commerce Department on Friday releases its estimate of second-quarter economic growth, said Ed Peters, chief investment officer at PanAgora Asset Management.
“A directionless market is usually a down market,” Peters said. “Right now, people are waiting instead of buying.”
Among Monday’s market highlights:
* Xerox slid 85 cents to $13.20 in active trading after the company’s quarterly profit fell short of expectations.
* Texas Instruments lost 16 cents to $30.60 in regular trading ahead of its profit report. The company beat analysts’ estimates, and its shares jumped to $32.30 in after-hours trading. Texas Instruments also raised its quarterly cash dividend to 3 cents a share from 2.5 cents.
“Our confidence level is probably higher than it has been for quite a long time,” the chip maker’s chief financial officer, Kevin Marsh, told Reuters.
* Also in the tech sector, Google fell $6.55 to $295.85, its second straight decline after its second-quarter profit report.
* Investors took profits in the home building sector, one of the market’s strongest this year. KB Home lost $3.45 to $80, Pulte Homes slid $3.30 to $90.19 and Lennar was down $1.47 to $64.93.
* Energy-related stocks were mostly higher for the fourth session in the last five. ConocoPhillips gained 98 cents to $62.23, Halliburton jumped $1.57 to $54.86 and Apache was up 77 cents to $70.72.
* Stock markets in China eased after rallying sharply Friday after the currency announcement. Shanghai’s B-share index was down 0.1% after soaring 7.2% on Friday.
* Brazil’s main stock market index plunged 860.44 points, or 3.4%, to 24,530.79 on renewed concern President Luiz Inacio Lula da Silva may be drawn into an investigation of alleged government corruption.
* In commodities trading, copper prices rk rose to a 16-year high in New York and a record in London as strikes at Asarco in Arizona and Texas continued.
Near-term copper futures rose 0.25 cent to $1.658 a pound in New York.
