Economic uncertainty pulls stocks downward
NEW YORK » Chronic economic worries stifled Wall Street's attempt at a rebound yesterday as stocks fell for a third straight session despite a solid outlook at General Electric Co. and modest but better-than-expected retail sales reports.
General Electric, a widely held Dow Jones industrial closely watched on Wall Street, said it was on track for another strong quarter and increased its stock buyback program. Encouraging sales at Wal-Mart Stores Inc. and other retailers also helped the market post early gains.
But the market, which had started the day higher, retreated after Dallas Fed President Richard Fisher reiterated his belief that inflation was rising near the high end of the Fed's comfort zone. Some investors also awaited the government's key employment report, due today and expected to detail job losses from the Gulf Coast hurricanes.
Those long-term challenges prompted investors to abandon some of the market's more popular holdings, pushing stocks lower through the session. A continued dropoff in oil prices caused a selloff in the high-flying energy sector, and small-cap and technology stocks also suffered as investors moved into larger, more established companies.
"This is certainly not bad, with retail sales OK and oil falling, but there's still a lot of uncertainty out there," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "You've still got an erosion in consumer confidence that could lead to a serious erosion in consumer spending, at the same time you have the (Federal Reserve) still hiking interest rates. It's a hard market to buy into."
The Dow fell 30.26, or 0.29 percent, to 10,287.10, adding to a loss of 218.12 over the previous two sessions.
Broader stock indicators also fell. The tech-focused Nasdaq composite index dropped 18.94, or 0.9 percent, to 2,084.08, and the Standard & Poor's 500 index lost 4.90, or 0.41 percent, to 1,191.49.
Bonds lost ground alongside stocks, with the yield on the 10-year Treasury note rising to 4.39 percent from 4.36 percent late Wednesday. The dollar weakened against other major currencies, while gold prices rose.
Another sharp drop in crude prices helped buoy stocks earlier in the session, with a barrel of light crude quoted at $61.36, down $1.43, on the New York Mercantile Exchange. However, with first-time jobless claims rising to 390,000 last week, an increase of 21,000 from the previous week, investors were increasingly nervous about employment in the wake of Hurricanes Katrina and Rita.