Uncertainly pulls down markets
The stock market finished lower Wednesday as investors, uncertain whether the worst of the credit crisis was over, refrained from extending Tuesday’s huge advance.
Share prices were also hurt by a reduced sales forecast from Macy’s and a report showing a slight increase in consumer spending last month. The department-store operator’s stock tumbled $2.18, or 7.1%, at $28.47.
Stocks bobbed in and out of positive territory for much of the day before taking a sharp turn lower in the last half-hour.
“All month long, once a direction has been established, it tends to accelerate in the last hour,” said Steven Goldman, chief market strategist with Weeden & Co., in Greenwich, Conn., saying stocks “hit a grease spot” late in the session Wednesday.
A report that a short-term bond fund run by General Electric’s asset management unit had suffered losses in mortgage-related securities contributed to the late sell-off, said Art Hogan, chief market analyst at Jefferies & Co. in Boston. GE ended down 20 cents at $39.01 after being up more than 70 cents.
The market was initially relieved after Bear Stearns said the investment bank’s leveraged finance business was improving. The company said it expected to take a $1.2-billion write-down in the fourth quarter, less than some investors had feared. Bear Stearns rose $2.40, or 2.4%, to $103.20.
On Tuesday, the Dow Jones industrial average surged nearly 320 points, propelled by reassuring comments from the chief executive of Goldman Sachs Group about its credit exposure.
But more evidence of the tenuousness of the debt markets came from Britain’s HSBC Holdings, which wrote down an additional $3.4 billion because of exposure to U.S. sub-prime loans, after writing down billions earlier in the year. But the bank still earned a third-quarter profit, and its shares edged up 7 cents to $88.75.
Oil prices, which sank Tuesday, resumed their climb Wednesday, raising concerns that inflation risk could keep the Federal Reserve from lowering rates to calm the stock market.
The Dow lost 76.08 points, or 0.6%, to close at 13,231.01. The Standard & Poor’s 500 index dropped 10.47 points, or 0.7%, to 1,470.58. The Nasdaq composite index fell 29.33 points, or 1.1%, to 2,644.32.
The Russell 2,000 index of smaller companies fell 6.68 points, or 0.8%, to 782.47.
Decliners outnumbered advancers by about 2 to 1 on the New York Stock Exchange.
Treasury bond yields slipped. The 10-year Treasury note fell to 4.25% from 4.28% late Tuesday.
After a one-day visit below $800, gold prices rose $15.80 to $813 an ounce in New York, while the dollar was mixed against rival currencies.
The Labor Department reported wholesale prices registered a slight gain in October, held down by a drop in energy costs. The moderation in inflation could be temporary, however, after oil prices surged this month to almost $100 a barrel.
Crude futures rose $2.92 to $94.09 a barrel on the New York Mercantile Exchange after plunging Tuesday by $3.45.
Meanwhile, the Commerce Department said retail sales managed only a small increase in October. It was the weakest showing since August and represented a significant slowdown from September.
The combination of the government report and the Macy’s forecast sent an index of retailing stocks 2.5% lower, giving it a 15% decline since the start of the year. Sears Holdings lost $5.27, or 4.2%, to close at $120.71. Kohl’s, the No. 4 department-store chain, fell $1.84 to $49.38
Target retreated $2.83, or 4.8%, to $56.77 after Merrill Lynch downgraded the stock, saying sales of clothing and household items would slow over the next 12 months.
In other market highlights:
* United Rentals plunged $10.51, or 31%, to $23.50 on a report, subsequently confirmed, that Cerberus Capital Management is backing out of a deal to acquire the company.
* Wendy’s International slid 98 cents, or 3.1%, to $30.67 after Nelson Peltz’s Triarc Co. reportedly bid less than expected for the hamburger chain operator.
* Shares of online brokerage E-Trade Financial, which plunged 59% on Monday on concerns about its mortgage-related holdings and rebounded 41% Tuesday, surged 54 cents, or 11%, on Wednesday to $5.54.
* La-Z-Boy fell 28 cents, or 3.8%, to $7.12. The furniture maker late Tuesday reported a net loss for the latest quarter attributed to the weak housing sector.
* VeriSign rose 55 cents to $33.70. The company said it would shed some business units.
* Qualcomm rose 88 cents, or 2.2%, to $40.04. The wireless technology company said it agreed to buy a mobile-banking software maker, and a court dismissed a Nokia patent complaint.
* McCormick rose $1.61, or 4.5%, to $37.39. The spice maker agreed to pay Unilever $605 million in cash for marinade and seasoning maker Lawry’s.
* Overseas, key stock indexes jumped 2.5% in Japan, 4.9% in Hong Kong, 1.1% in Britain, 0.1% in Germany and 1.3% in France.
