Stocks end mixed as oil prices gain
NEW YORK » Stocks stalled yesterday, ending mostly lower after rising oil prices and ongoing worries about the financial sector gave investors little reason to buy a day ahead of a Federal Reserve meeting.
Disappointment that Saudi Arabia is not boosting production by more than 200,000 barrels a day sent oil prices higher, fanning concerns about inflation. Light, sweet crude rose $1.38 to settle at $136.74 per barrel on the New York Mercantile Exchange.
Energy companies rose but sectors like airlines and financials logged sizable losses.
With little economic data arriving, investors focused on the price of oil and the Fed's two-day meeting, which lets out tomorrow. Most investors expect the central bank to keep its key federal funds rate on hold, and in its economic statement, emphasize the rising threat of inflation.
Denis Amato, chief investment officer at Ancora Advisors in Cleveland, questions how the Fed will balance weakness in areas of the economy like the financial sector with concerns about the weak dollar and the rising inflation that low interest rates cause.
"We think the Fed is sort of in a quandary here ... if they raise rates, they run the risk of having some negative impact on the economy and if they don't raise rates, they run the risk of negatively influencing the dollar. That trend is driving up oil, which is impairing the economy," he said.
The Dow Jones industrial average slipped 0.33, or less than 0.01 percent, to 11,842.36.
Broader stock indicators ended mixed. The Standard & Poor's 500 index edged up 0.07, or 0.01 percent, to 1,318.00, and the Nasdaq composite index fell 20.35, or 0.85 percent, to 2,385.74. The Russell 2000 index of smaller companies fell 5.92, or 0.82 percent, to 719.81.
But the market's overall direction was downward. Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 4.09 billion shares compared with a heavy 5.15 billion seen Friday, when stocks fell sharply and several types of options contracts expired.
The yield on the benchmark 10-year Treasury note, which moves opposite its price, was at 4.17 percent, the same as late Friday. The dollar rose against most other major currencies, while gold prices fell.
The financial sectors' woes continued. Citigroup Inc. is in the midst of cutting its investment banking staff by 10 percent, and Goldman Sachs Group Inc. is also eliminating jobs, The Financial Times reported. Citigroup fell 75 cents, or 3.9 percent, to $18.55, and Goldman fell $5.18, or 2.8 percent, to $178.59.
Other names in the sector declined as investors fretted about the overall well-being of the financials.
Bank of America Corp. fell $1.22, or 4.5 percent, to $25.88; the stock hit a 52-week low of $25.83. American International Group Inc. logged a 52-week low of $30.12 and finished down $1.80, or 5.6 percent, to $30.30.
United States Steel Corp. rose $8.23, or 4.5 percent, to $191.02 after a Goldman Sachs analyst wrote in a note to investors that the company is best poised among steel makers to benefit from higher prices.