Stocks close lower as investors waver
NEW YORK » Wall Street closed an uneasy session lower yesterday as investors, uncertain if the worst of the credit crisis is over, refrained from extending Tuesday's huge advance.
Stocks bobbed in and out of positive territory for much of the day before taking a sharp turn lower in the last half-hour.
"They hit a grease spot," said Steven Goldman, chief market strategist with Weeden & Co., in Greenwich, Conn.
The market was initially relieved after Bear Stearns Cos. Chief Financial Officer Sam Molinaro said the investment bank's leveraged finance business is improving.
He said the company expects to take a $1.2 billion writedown during the fourth quarter, which eased worries of even higher losses.
Yesterday's news followed reassuring comments from Goldman Sachs Group Inc.'s chief executive about its own credit exposure that helped propel the Dow Jones industrials up nearly 320 points yesterday.
But more evidence of the tenuousness of the credit markets came from Britain's HSBC Holdings PLC, which said it would have to write down a further $3.4 billion from its U.S. business during the third quarter because of exposure to subprime loans, after writing down billions earlier in the year.
Meanwhile, after plunging Tuesday, oil prices resumed their climb yesterday, raising concerns that inflation risks could prevent the Federal Reserve from lowering rates to calm the shaky market.
The Dow fell 83.16, or 0.62 percent, to 13,223.93.
Broader stock indicators also fell. The Standard & Poor's 500 index lost 10.47, or 0.72 percent, to 1,470.58, while the Nasdaq composite index tumbled 29.33, or 1.10 percent, to 2,644.32. The Russell 2000 index of smaller companies fell 6.68, or 0.86 percent, to 782.47.
Declining issues outnumbered advancers by roughly 2 to 1 on the New York Stock Exchange, where volume came to 1.56 billion shares.
Treasury bonds were flat. The 10-year Treasury note's yield, which moves in the opposite direction of its price, held at 4.26 percent, even with late yesterday.
Gold prices rose $15.70 to settle at $814.70 an ounce in New York, while the dollar was mixed against rival currencies.
The U.S. Labor Department reported wholesale prices registered a slight gain in October, held down by a drop in energy costs. The moderation in inflation could be temporary, however, with oil prices surging to fresh records of around $98 a barrel in early November.
A barrel of light sweet crude rose $2.92 to settle at $94.09 a barrel on the Nymex, after plunging Tuesday by $3.45.
Bear Stearns rose $2.58, or 2.6 percent, to $103.45, after its CFO's encouraging comments. Merrill Lynch & Co. rose $1.03 to $57.98, on reports that NYSE Euronext CEO John Thain is leaving to become CEO of Merrill.
Meanwhile, the U.S. Commerce Department reported retail sales managed a small increase in October as consumers struggled to cope with a steep slump in housing, volatile financial markets and soaring energy costs. It was the weakest showing since August.