Stocks end mixed amid concerns
Wall Street ended an erratic session mixed Tuesday, with the Dow Jones industrials reaching a third straight record close despite concerns about corporate profits and the effect of falling oil prices.
The market struggled to digest a drop in oil prices, which fell to a 19-month low near $51 a barrel on a report that Saudi Arabia, leader of the Organization of the Petroleum Exporting Countries, said there might be no need for further production cuts. The statement punished shares of major oil and gasoline companies, though lower energy prices are a boon to consumers.
Investors also tried to reconcile conflicting views about the pace of corporate earnings. The first wave of reports have shown strength, but the market was uneasy after profit warnings from companies including home builder Centex and software maker Symantec.
“The markets have had a big run-up, and it is really trying to continue on a positive pace while also alleviating some of the overbought characteristics before earnings really get going,” said Scott Fullman, director of investment strategy at Hapoalim Securities USA. “Lower oil has brought back confidence to the consumer, but the Dow has been hurt as it struggles with the drop in big oil companies.”
The Dow rose 26.51 points, or 0.2%, to 12,582.59.
Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 1.17 points, or 0.1%, at 1,431.90, and the Nasdaq composite index fell 5.04 points, or 0.2%, to 2,497.78.
Bond yields slipped after a New York Federal Reserve report said the pace of manufacturing in its region hit its lowest level since summer 2005.
Yields on Treasury notes have gained in recent sessions on expectations that the Federal Reserve won’t cut rates because of signs of economic strength. On Tuesday, the yield on the benchmark 10-year Treasury note fell to 4.75% from 4.77% on Friday. Markets were closed Monday for Martin Luther King Day.
Oil slumped $1.78 to $51.21 a barrel in New York, the lowest it’s traded since May 2005. The drop in turn sent shares of major oil companies lower. Exxon Mobil was down $1.03 to $71.63, and ConocoPhillips fell $1.02 to $62.81.
The drop in oil had to compete with earnings for investors’ attention.
“The market is very much focused on some earnings stories that will be coming out, and the back-and-forth comes from that,” said Richard Cripps, chief market strategist at Stifel Nicolaus.
In other market highlights:
* Lower oil prices helped transportation companies. AMR, the parent of American Airlines, rose $2.67, or 7.1%, to $40.23. FedEx climbed $2.82 to $111.68 after an analyst said it would benefit from lower fuel costs and solid economic growth.
* Freeport-McMoRan Copper & Gold, which owns the world’s largest gold mine, slid $1.61 to $53.40. Earnings last quarter fell to $1.99 a share from $2.19 a year earlier as rising costs and lower output eroded the benefit of higher metal prices, the company said.
Gold futures slipped 90 cents an ounce to $624.60.
* Commerce Bancorp plunged $2.89, or 8.3%, to $31.83 after saying it was the target of an investigation by the Office of the Comptroller of the Currency and the Federal Reserve.
* Symantec, which makes Internet security software, fell after it said 2007 profit would fall shy of Wall Street projections. The company blamed the miss on weak performance in its data center management business, causing shares to fall $2.69, or 13.2%, to $17.79.
* Centex said it anticipated a loss from continuing operations of about $2 a share for its fiscal third quarter. The Dallas-based residential construction company also said it would reduce its housing inventory and trim its workforce to help cut future losses. Shares fell $1.55 to $51.61.
* Network equipment maker Cisco Systems fell 88 cents, or 3%, to $28.04 after analysts at Banc of America Securities and Prudential cut their investment ratings on the stock.
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Bloomberg News was used in compiling this report.
