Anxious investors send stocks lower
NEW YORK » Stocks extended their losses into a second day yesterday after a cautious outlook from home builder Toll Brothers Inc. and a surge in energy prices rattled investors.
The market was pleased with revised forecasts from chipmakers Texas Instruments Inc. and Xilinx Inc., signals that tech spending remains healthy. But anxious traders brushed aside the news and waited for Intel Corp.'s mid-quarter update after the closing bell.
Without much news to guide the market, Wall Street drifted this week following a November rally that vaulted stocks to four-year highs. Recent signs that the economy is faring better than expected renewed fears about inflation and rising interest rates, although some traders still anticipate a final runup in stocks by year-end.
"The dynamics of (this week's) decline have been orderly and nothing to be concerned with," said Steven Goldman, chief market strategist at Weeden & Co. "The market ... cleansed some of its excesses on that pullback."
Goldman said the main concern on Wall Street continues to be whether the Federal Reserve will extend its string of rate hikes now that the economy appears to be doing well. Higher rates could lead to a consumer slowdown as lending costs increase, he said.
The Dow Jones industrial average fell 55.79, or 0.52 percent, to 10,755.12.
Broader stock indicators were also lower. The Standard & Poor's 500 index fell 1.53, or 0.12 percent, to 1,255.84, and the Nasdaq composite index fell 5.55, or 0.25 percent, to 2,246.46.
Colder weather in the Northeast and Midwest drove expectations for greater heating fuel demand, although weekly inventory reports have indicated that U.S. oil and gas reserves continue to expand. On the New York Mercantile Exchange, natural gas surged $1.29 to $14.99 per 1,000 cubic feet, as a barrel of light crude jumped $1.45 to $60.66.
Bond prices reversed Wednesday's decline, with the yield on the 10-year Treasury note tumbling to 4.46 percent from 4.52 percent late Wednesday. Gold prices lingered near record highs.
The sole economic report of the day came from the Labor Department, which said unemployment claims grew by 6,000 to 327,000 last week, although 8,000 of those were hurricane related. Economists were expecting claims to drop to 318,000.
General Motors Corp. paced the Dow's decline, falling $1.04 to $22. The troubled automaker, which plans to cut 30,000 jobs and shut 12 plants by 2008, on Wednesday said it is in talks to appoint billionaire Kirk Kerkorian as a company director, a move analysts say could lead to drastic restructuring actions.