Indexes Sink as Crude Oil Prices Rise
There were few places to hide Friday on Wall Street, as rising energy prices and some downbeat earnings reports fueled a rout of the bulls.
Nearly every major stock index lost at least 1.5% for the day, in heavy trading pumped up by selling tied to the regular monthly expiration of certain stock option contracts, analysts said.
The Standard & Poor’s 500 index sank 23.55 points, or 1.8%, to 1,261.49, its biggest percentage decline since September 2003.
The technology-dominated Nasdaq composite plunged 54.11 points, or 2.4%, to 2,247.70, its worst loss since August 2004.
The Dow Jones industrial average slid 213.32 points, or 2%, to 10,667.39. It was the Dow’s sharpest decline since May 2003.
Loser swamped winners by more than 2 to 1 on the New York Stock Exchange and on Nasdaq.
Within the S&P; 500, 113 stock industry groups fell for the day; just seven rose higher.
Although oil prices have been rebounding, the surge Friday to $68.35 a barrel for near-term crude futures in New York, up $1.52 for the day, was more than some investors could stand. The record closing price was $69.81 on Aug. 30, after Hurricane Katrina.
Oil has been boosted this week by political instability in Nigeria and by a standoff between Iran and the U.S. and its European allies over nuclear issues.
Higher energy prices could drag down the economy and corporate earnings. That worry was compounded Friday by disappointing quarterly reports from General Electric and Citigroup.
A report showing a rise in consumer confidence this month did little to distract traders.
But some analysts said investors might be losing perspective on profit reports.
“Earnings haven’t been disastrous thus far, we’ve just had some big names that were a bit conservative in their outlooks,” said Susan Malley at Malley Associates Capital Management. “The news is not terribly bad, it just has not met the expectations of the investing community.”
What’s more, a pullback in the market wouldn’t be unusual after the gains since fall, many experts said. The Nasdaq index rose 14.4% from mid-October to its recent peak Jan. 11.
For the week, the Nasdaq fell 3%, the S&P; 500 was off 2% and the Dow lost 2.7%.
The Dow was down 0.5% year to date as of Friday, but the Nasdaq was up 1.9% and the S&P; 500 was up 1.1%.
Among Friday’s highlights:
* Shares sliding on earnings news included GE, down $1.31 to $33.37; Citigroup, off $2.25 to $45.69; Motorola, down $1.87 to $22.48; Xilinx, down $2.40 to $27.39; and Johnson Controls, down $5.67 to $67.88.
* Investors continued to hammer shares of tech companies that reported earnings shortfalls earlier in the week. Intel lost 64 cents to $21.76, a 52-week low. Yahoo gave up 59 cents to $33.74, its lowest since October.
Other losers in the tech sector included Apple Computer, off $2.95 to $76.09; Broadcom, down $3 to $56.38, and Adobe Systems, down $2.03 to $38.43.
And Google, a market star for most of the last year, plummeted $36.98, or 8.5%, to $399.46.
* Energy stocks provided a rare bright spot, as oil rose. In the oilfield services sector, Halliburton jumped $3.75 to $75.50 and Schlumberger shot up $7.38 to $122.25.
* BlackRock soared $7.65 to $127 on media reports that Morgan Stanley may buy control of the New York-based money manager for about $8 billion.
* Among Southland issues, Reliance Steel jumped $4.25 to a record $72.68, continuing to advance after announcing this week that it would buy rival metals distributor Earle M. Jorgensen. Jorgensen rose 27 cents to $13.78.
* Treasury bond yields were little changed, suggesting that investors who were selling stocks weren’t rushing into bonds. The 10-year T-note yield dipped to 4.35% from 4.37% on Thursday.
