Stocks close lower after late-day selloff
NEW YORK » Wall Street closed moderately lower yesterday after worries about the impact of high oil prices on the economy triggered a late-day drop, erasing an earlier moderate advance.
Upbeat earnings from homebuilder Toll Brothers Inc. and a rebound in oil and gold prices had lifted stocks through most of the session following their recent heavy losses.
But an afternoon news report that quoted U.S. Energy Secretary Sam Bodman as saying soaring energy prices could damage economic growth ignited traders' inflation concerns and set off renewed selling.
Stocks had shown signs of stabilizing after suffering nearly two weeks of declines as the market fretted about interest rates and the economy's health. But investors clearly were still nervous about keeping money in the market while they remained uncertain about the Federal Reserve's plan for lending rates.
"The bargain hunters ran out of steam, and we still have the same concerns on the macro scene," said Art Hogan, chief market analyst for Jefferies & Co. "We're still concerned about inflation, the Fed tightening -- all of that didn't go away because we're oversold."
There was no new economic data to give investors clues about the interest rate outlook after recent inflation signals supported the possibility of more rate hikes from the Fed. Although Fed Chairman Ben Bernanke spoke to a congressional panel yesterday, his testimony on personal finance steered clear of the central bank's monetary policy.
At the close, the Dow lost 26.98, or 0.24 percent, to 11,098.35, after adding as much as 77 points earlier. The Dow is 4.7 percent off a six-year closing high of 11,642.65, reached May 10.
Broader stock indicators also shed earlier gains. The Standard & Poor's 500 index dropped 5.49, or 0.43 percent, to 1,256.58, and the Nasdaq composite index fell 14.10, or 0.65 percent, to 2,158.76.
Declining issues overtook advancers by about 9 to 7 on the New York Stock Exchange, where preliminary consolidated volume of 2.76 billion shares trailed the 2.99 billion shares that changed hands Monday.
The Russell 2000 index of smaller companies advanced 3.96, or 0.55 percent, to 711.29.
Bonds pulled back slightly from their recent runup, with the yield on the 10-year Treasury note rising to 5.06 percent from 5.04 percent late Monday.
The U.S. dollar was flat against other major currencies, and gold prices gained ground to stand near $670 an ounce.