Stocks finish mixed as oil prices rise again
The stock market’s rebound from the depths stalled Monday as the price of oil climbed, offsetting optimism engendered by better-than-expected earnings at Bank of America.
Although the market’s major indexes showed modest losses Monday, the number of stocks advancing outpaced decliners by almost 2 to 1 on the New York Stock Exchange and by about 4 to 3 on Nasdaq.
Oil surged on concerns that a threat of new sanctions against Iran could escalate tensions in the Middle East, and on worries about a possible hurricane in the Gulf of Mexico. Crude futures rose $2.16 to $131.04 a barrel on the New York Mercantile Exchange.
That quashed market enthusiasm in the wake of Bank of America’s second-quarter results. Four of the five biggest U.S. banks have now reported better-than-expected earnings for the April-to-June period, raising hopes that the financial sector is starting to recover from the year-old credit crisis.
The Dow Jones industrial average fell 29.23 points, or 0.3%, to 11,467.34 after moving in and out of positive territory a number of times. Broader indexes posted smaller declines. The Standard & Poor’s 500 index fell 0.68 point, or 0.1%, to 1,260.00. The Nasdaq composite index dropped 3.25 points, or 0.1%, to 2,279.53.
Stocks of smaller companies fared much better. The Russell 2,000 index of small-capitalization stocks rose 4.55 points, or 0.7%, to 697.63.
Monday’s moves followed big three-day advances for the Dow and the S&P; from nearly two-year lows last Tuesday. In the last three sessions of last week, the Dow surged 4.6% and the S&P; rose 3.7%.
Yields on government bonds fell Monday along with the major stock indexes. The yield on the benchmark 10-year Treasury note fell to 4.04% from 4.08% late Friday.
The dollar was mixed against other major currencies, while gold prices advanced.
Shares of Bank of America rose $1.07, or 3.9%, to $28.56 after the company reported that bad mortgage debt pushed profit down 41%. But the report surpassed expectations thanks to a solid performance in operations not linked to housing.
An index of financial stocks in the S&P; 500, which soared 21% over the preceding three trading days, jumped as much as 2.8% on the results, but finished the day down 0.8%.
Fannie Mae rose 73 cents, or 5.4%, to $14.13, while Freddie Mac fell 43 cents, or 4.7%, to $8.75, as new restrictions on short sales of their stocks and those of several big investment banks took effect. The Securities and Exchange Commission announced the emergency order last Tuesday after Fannie and Freddie tumbled in a crisis of confidence that spurred the Bush administration and the Federal Reserve to put together a rescue plan.
After the closing bell, American Express issued worse-than-expected results that could rattle the market today. The company’s second-quarter profit tumbled 38% as consumer spending slowed and credit indicators deteriorated beyond the company’s expectations. Its stock fell $1.29, or 3.1%, to $40.90 in regular trading, then declined more than 10% in after-hours trading.
Oil’s rise sent shares of companies dependent on discretionary consumer spending down 1.3%, the sharpest drop among major industry groups in the S&P; 500. Home Depot slumped 32 cents to $23.12. Target fell $1.21 to $45.66.
Merck, meanwhile, had the steepest decline in the Dow, dropping $2.35, or 6.2%, to $35.33, while Schering-Plough fell $2.49, or 12%, to $18.95, after research showed that their cholesterol drug Vytorin didn’t cut the progression of aortic valve disease. The study also showed 9.9% of patients getting Vytorin developed cancer, compared with 7% given a placebo, though one of the researchers said further analysis showed no increased risk.
Energy stocks in the S&P; 500 climbed 2.9%, the most since June 23, as oil rose. Refiner Valero Energy gained $2.61, or 7.9% to $35.72. Massey Energy rose $7.40, or 12%, to $74.81. Exxon Mobil climbed $1.44, or 1.8%, to $82.98.
Stocks also were helped by optimism that merger activity might be reviving after Swiss drug maker Roche Holding announced plans to buy the stake in Genentech it doesn’t already own for $43.7 billion. Genentech jumped $12.06, or 15%, to $93.88.
In other market highlights:
* Yahoo fell 78 cents, or 3.5%, to $21.67 after the Internet giant staved off an attempt by activist investor Carl Icahn to take control of the firm’s board. Icahn, who has favored selling Yahoo to Microsoft, reached a settlement with the company that will make him and two allies Yahoo directors.
* Overseas, key stock indexes climbed 0.5% in Britain, 0.7% in Germany and 0.6% in France.
