Stocks mostly lower despite oil’s retreat
Stocks closed mostly lower Tuesday after a volatile session as another drop in oil prices and the prospect of higher interest rates pushed down shares of oil and raw-material companies.
In a speech late Monday that described a substantial economic downturn as unlikely, Federal Reserve Chairman Ben S. Bernanke also cited growing inflation risks, raising expectations that the central bank might hike interest rates this year.
And despite oil’s continued retreat from record levels, investors remain concerned that high energy prices will not just aggravate inflation but also stymie consumer spending.
“The consumer has held up surprisingly well. However, at some point there is a breaking point,” said Chris Colarik, a portfolio manager at Glenmede Investment Management in Philadelphia.
The Dow Jones industrial average rose 9.44 points, or 0.1%, to 12,289.76, after moving in and out of positive territory throughout the day.
However, broader stock indicators declined. The Standard & Poor’s 500 index fell 3.32 points, or 0.2%, to 1,358.44, and the Nasdaq composite index fell 10.52 points, or 0.4%, to 2,448.94.
The Russell 2,000 index of smaller companies fell 2.63 points, or 0.4%, to 732.62.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange.
Government bond yields jumped on Bernanke’s remarks. The benchmark 10-year Treasury note rose to 4.11% from 4% late Monday.
Futures trading suggested that investors believed the odds of an increase in the central bank’s key interest rate this fall had risen to a near certainty.
Crude futures slumped $2.55 to settle at $131.80 a barrel in New York trading.
The dollar rose against other major currencies, while gold and copper prices tumbled because a stronger U.S. currency can hurt commodity prices.
Barrick Gold, the world’s biggest gold producer, lost $2.85, or 6.8%, to $39.20. Newmont Mining dropped $2.29, or 4.7%, to $46.73.
Energy stocks in the S&P; 500 sank 2.2% as a group, the steepest drop among the index’s main industry groups. Exxon Mobil slipped $1.18 to $87.89. Chevron lost $2.42, or 2.4%, to $98.78.
Financial stocks rose 1.1%, the most among the S&P; industry groups. National City, Ohio’s biggest bank, helped lead the advance after it signed an agreement with regulators on capital, risk and liquidity management. National City added 17 cents, or 3.8%, to $4.64.
Washington Mutual rebounded from a 16-year low, adding 43 cents, or 6.9%, to $6.68. The stock tumbled 17% Monday.
Lehman Bros. Holdings sank $1.98, or 6.7%, to $27.50 after Wachovia Corp. and Credit Suisse Group downgraded the stock.
In other market highlights:
Disney climbed 65 cents, or 2%, to $33.83. The media giant said its ESPN network would book some deferred revenue from cable and satellite-television providers in the third quarter, earlier than predicted.
Ford Motor fell 24 cents, or 3.8%, to $6.12. Billionaire Kirk Kerkorian said Ford shareholders tried to sell 50 times the amount of stock he sought to buy in a tender offer, suggesting a lack of confidence in the carmaker’s turnaround plan.
Texas Instruments lost 91 cents, or 2.9%, to $30.42 after the chip maker said its sales of cellphone chips were “unseasonably weak.”
Among other chip makers, Irvine-based Broadcom lost $1.17, or 4.2%, to $26.53, and Nvidia dropped $1.40, or 5.9%, to $22.29.
Coca-Cola jumped $2.15, or 3.8%, to $58.01. An analyst upgraded the stock to “buy” from “hold,” predicting strong international growth, especially in Latin America.
Overseas, key stock indexes dropped 1.1% in Japan, 0.9% in Britain, 0.7% in Germany and 0.8% in France.
