Stocks End Lower as Oil Climbs
Profit taking sent stocks modestly lower Tuesday after oil prices topped $55 a barrel and a disappointing earnings update from Texas Instruments cast fresh doubts on the tech sector.
In a session with little economic news, the sharp rise in oil prices dominated trading. Crude oil futures rose above $55 for the first time in more than four months before pulling back at the end of trading. A barrel of light crude settled at $54.59, up 70 cents, in New York trading.
“Because of the lack of other news, oil becomes the big news,” said Brian Bruce, a money manager at PanAgora Asset Management in Boston. “In aggregate, there’s generally been more good news than bad news. But with nothing else going on today, you’re seeing oil put a damper on everybody’s enthusiasm.”
The Dow Jones industrial average dipped 24.24 points, or 0.2%, to 10,912.62.
Broader stock indicators also were lower. The Standard & Poor’s 500 index was down 5.88 points, or 0.5%, at 1,219.43, and the Nasdaq composite lost 16.66 points, or 0.8%, to 2,073.55.
Losers outnumbered winners by nearly 8 to 5 on the New York Stock Exchange.
Treasury bond yields rose sharply amid what traders called a rush of speculative and technical selling. Bond yields rise as their prices fall. The yield on the benchmark 10-year note jumped to a 3 1/2-month high of 4.39% from 4.31% on Monday.
The continuing rally in oil and other commodities is hurting bonds by stoking inflation concerns, some analysts say. The dollar’s renewed slide also is undercutting the bond market, some say.
The dollar dropped to a two-month low against the euro, which traded at $1.334, up from $1.320 on Monday. The greenback fell to 104.71 yen from 105.17.
“It’s like the ghosts of Christmas past -- oil and the dollar,” said Bryan Piskorowski, market analyst at Wachovia Securities. Still, given the stock market’s recent gains, “A little bit of paring shouldn’t come as a complete surprise,” he said.
In other market highlights:
* Tech stocks slipped after gaining ground in Monday’s session, with semiconductor stocks leading the way after Texas Instruments cut its near-term earnings forecasts.
Texas Instruments lost $1.03 to $26.34. Intel subtracted 31 cents to $24.80 and Broadcom gave up 44 cents to $31.67.
* Another chip company, Qualcomm, dropped $1.10 to $36.29 after the company announced that Paul Jacobs, son of Chief Executive Irwin Mark Jacobs, would succeed his father in the top post July 1. The elder Jacobs, who co-founded Qualcomm in 1968, will remain as chairman.
Qualcomm shares had rallied $1.89 on Monday after the company raised its near-term profit forecast.
* Surging oil prices helped to lift the Reuters-CRB index of 17 commodity futures prices 1.1% to 312.65, its highest since January 1981. Gains in commodities, and the weaker dollar, pushed near-term gold futures in New York up $5.30 to $440.30 an ounce, the highest since mid-December.
Gold mining stocks rallied with the metal. Barrick Gold gained 90 cents to $26.01, Newmont Mining jumped $1.37 to $45.86, and Goldcorp soared 75 cents to $14.99.
* Steel stocks tumbled after the head of U.S. Steel, John Surma, called on China to rein in its steel production, citing concerns about the potential for excess global supply.
U.S. Steel slumped $2.17 to $56.83, Oregon Steel fell $1.60 to $26.30 and Steel Dynamics was down $2.13 to $40.84.
* Home builders’ shares were broadly lower after Ryland said weather issues would hurt first-quarter profit. Ryland lost $4.27 to $67.54, KB Home slid $3.66 to $120.90 and Toll Bros. lost $3.25 to $86.20.
* Dow component McDonald’s fell 73 cents to $33.48 as investors worried about weak European sales. The chain, however, reported a 4.6% rise in U.S. sales in February at stores open at least a year. The stock hit a four-year high on Monday.
* Sony continued to climb after the company on Sunday named former CBS president Howard Stringer as chief executive. Sony’s U.S.-traded shares gained $1.71 to $41.02.
* Rail giant Norfolk Southern added 1 cent to $37.62. The company sold $300 million in 100-year bonds paying an annual yield of 6%. Such very long-term bonds are a relative rarity.
* Among initial public offerings, International Securities Exchange priced its IPO at $18 a share, at the top of the expected range. The stock will begin trading today on the NYSE under the symbol ISE. The New York-based company operates the largest U.S. market trading stock put and call options.
