Oil stocks take hit from crude prices
NEW YORK » Stocks fell yesterday as declining oil prices sent the energy sector lower and investors continued their jittery reactions to corporate earnings.
Energy stocks such as Halliburton Co. and Valero Energy Corp. fell along with crude oil futures, pulling the Standard & Poor's 500 index lower on a day when most other sectors were nearly flat.
Trading remained erratic after last Friday's big drop, which sent the Dow down 213 points. The selloff followed a strong start to 2006, which sent the major indexes to multi-year highs.
"We had that great run-up," said Susan L. Malley, chief investment officer for Malley Associates Capital Management. "Stocks were fully pricing good earnings reports or good outlooks. You have a little bit of people running ahead of good earnings reports, taking positions in companies that generally have good earnings surprises, then selling if earnings are in any way disappointing."
The Dow Jones industrial average fell 2.48, or 0.02 percent, to 10,709.74.
Broader stock indicators were lower. The S&P 500 index fell 2.18, or 0.17 percent, to 1,264.68 and the Nasdaq composite index fell 4.60, or 0.2 percent, to 2,260.65.
Crude oil futures fell, dropping $1.21 a barrel to settle at $65.85 in trading on the New York Mercantile Exchange.
Bonds fell, with the yield on the 10-year Treasury note rising to 4.48 percent from 4.39 percent late Tuesday. The dollar rose against other major currencies; gold prices also climbed.
In economic news, the National Association of Realtors said existing home sales dropped 5.7 percent in December to 6.6 million units. Economists had expected sales to come in at an annualized rate of 6.87 million, down from 6.97 million in November.
The decline in home sales, along with the return of the inverted yield curve, in which some short-term bonds sell for higher yields than long-term bonds, are signs of a pending economic slowdown, said Jack A. Ablin, chief investment officer at Harris Private Bank in Chicago.
"This data confirms the scenario in which we see slowing growth due to weaker housing," he said. "We don't believe that the slack will be fully taken up by corporate spending."
Nervousness about unrest in Nigeria and Iran's nuclear ambitions helped send the energy sector lower. Halliburton fell $1.71 to $74.24 in advance of its earnings, expected today; Valero fell $1.93 to $58.37.
The Walt Disney Co. fell 55 cents to $25.44 after agreeing to acquire Pixar Animation Studios Inc. for $7.4 billion in stock.