Cautious investors cash in their gains
NEW YORK » Stocks declined modestly yesterday as a weakening U.S. dollar and a mixed batch of earnings reports led cautious investors to cash in on last week's gains. Oil prices also fell sharply as energy traders took profits following futures' recent runup.
Disappointment over lower profit at Xerox Corp. and a reduced 2007 forecast from TD Ameritrade Holding Corp. overshadowed strong results from Caterpillar Inc. However, investors largely ignored the earnings news as they readied for Federal Reserve Chairman Ben Bernanke's congressional testimony and the gross domestic product reading later this week.
A steep drop in crude futures gave investors some relief following oil's recent climb to a record $75 a barrel. The market's trends suggest oil prices will stabilize or retreat further in the coming weeks, said Rick Pendergraft, an equity trader for Schaeffer's Investment Research.
"Looking at some of the data, I can see oil moving sideways or maybe lower," said Pendergraft, who added that many oil-related stocks are overbought.
"To me, it was everybody jumping on board at the same time. They didn't think $75 could be taken out."
Persistent worries about Iran's nuclear arms program nonetheless kept the market on edge. A barrel of light crude sank $1.84 to settle at $73.33 on the New York Mercantile Exchange.
At the close of trading, the Dow Jones industrial average dropped 11.13, or 0.1 percent, to 11,336.32. The Dow ended Friday at its highest level since early January 2000.
Broader stock indicators also finished lower. The Standard & Poor's 500 index fell 3.17, or 0.24 percent, to 1,308.11, and the Nasdaq composite index declined 9.48, or 0.4 percent, to 2,333.38.
Bonds rebounded somewhat after their recent slide, with the yield on the 10-year Treasury note slipping to 4.99 percent from 5.01 percent late Friday. The U.S. dollar plunged against the Japanese yen and was flat against other major currencies; gold prices backed off a 25-year high.
Wall Street faced another session with no new government data to give traders clues about the economy's health, but this week brings critical readings of new home sales, jobless claims, labor costs and GDP growth. Bernanke is also scheduled to speak before the Joint Economic Committee Thursday.
The major indexes finished higher last week, boosted by signs that the Fed could soon end its series of interest rate increases. However, the continued rise in energy and consumer prices have investors still fearful of inflation.