Stocks: 2 days up, 1 down
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Stocks: 2 days up, 1 down
Stocks: 2 days up, 1 down
Market turns negative after two-day rally. Worries about oil prices, insurance sector pace losses.
October 19, 2004: 5:57 PM EDT
By Alexandra Twin, CNN/Money Staff Writer
NEW YORK (CNN/Money) - Stocks slumped Tuesday, dragged down by still-high oil prices and a shredding in the insurance sector.
The Dow Jones industrial average (down 58.70 to 9,897.62, Charts) lost 0.6 percent and the broader Standard & Poor's 500 (down 10.79 to 1,103.23, Charts) index lost about 1 percent.
The Nasdaq composite (down 13.62 to 1,922.90, Charts) lost 0.7 percent.
Solid earnings from IBM and Texas Instruments had given investors something positive to latch on to in the morning, but the negatives won out in the afternoon.
Oil closed lower for a second straight session, but remained near record highs, keeping investors on edge.
Weakness in the insurance sector added to the pullback.
Declines were broad based, with 22 out of 30 Dow issues falling, including insurer AIG (down $1.98 to $57.70, Research).
“I think there are a few factors here,” said Sarat Sethi, portfolio manager at Douglas C. Lane & Associates. "Insurance stocks are getting hit with the Spitzer issue. People are nervous about that and are selling on the news."
Additionally, "oil is still up pretty high," he added. "And the earnings so far have been fine but aren't exactly blowing out the lights."
After the close Tuesday, Motorola (down $0.22 to $18.50, Research) reported earnings of 20 cents a share, up from a year ago and a penny more than expected. The No. 2 cell phone maker also reported revenue that rose from a year earlier but missed analysts' estimates. Shares fell more than 5 percent after the bell.
Earnings reports due before the open Wednesday include Dow components Honeywell (Research), JP Morgan Chase (Research), Pfizer (Research) and United Technologies (Research). Other companies due to report include Delta Air Lines (Research) and Lucent Technologies (Research).
(For a preview of these and other key earnings due this week, click here.)
Before the start of trade Thursday, the Conference Board releases its leading economic indicators. LEI probably fell 0.1 percent in September after falling 0.3 percent in August, according to Briefing.com forecasts.
Thursday also brings the Philadelphia Fed index, due shortly after the open. The index measures manufacturing in three states in the mid-Atlantic region. A rise of 18 in October from 13.4 in September is expected.
All eyes on oil, election
The major indexes managed a relief rally Friday, Monday and early Tuesday, as global oil supply shortage fears eased a bit and some of the earnings impressed. But that proved unsustainable Tuesday.
Trading is likely to remain choppy for at least the next couple of weeks, analysts say.
“There’s a pessimism about the economic growth that I think you see in the market,” said John Davidson, president and CEO at PartnersRe Asset Management.
Davidson said that economic growth is still intact, but is moving at a slower pace than it was several weeks ago, and that’s creating some of the nervousness for investors. The sustained higher oil prices have exacerbated those concerns.
U.S. light crude for November delivery fell 38 cents Tuesday to settle at $53.29 a barrel on the New York Mercantile Exchange, not far from the record closing high of $54.93 hit last Friday.
"I think there's also bound to be a lot of hesitation until the election is over," Davidson added. "After that, I think the market should be freer to move in line with earnings.”
Polls show the Nov. 2 election is basically a dead heat between President Bush and Sen. John Kerry.
Insurers under fire again
The insurance sector was in the spotlight again, with a number of stocks down in active trade.
The sector has been bleeding since New York Attorney General Eliot Spitzer sued Marsh & McLennan a week ago. The largest U.S. insurance broker was accused of bid-rigging in a suit that also included Dow component AIG.
Both AIG and Marsh & McLennan (down $1.47 to $24.10, Research) fell Tuesday.
Additionally, Spitzer's office is apparently turning its focus to health insurers.
UnumProvident (down $1.33 to $12.19, Research) said it received subpoenas regarding the way it compensated insurance brokers. Shares fell 10 percent.
Others in the sector fell too, including UnitedHealthcare (down $6.85 to $66.50, Research), which lost 9.3 percent.
IBM, TI impress
Both IBM and Texas Instruments released improved earnings after the close Monday.
IBM (up $3.45 to $89.37, Research) reported earnings of $1.17 per share, up from $1.02 a year earlier and 3 cents more than expected. The tech behemoth also said results for the rest of the year would top estimates. Shares rose 4 percent.
Texas Instruments (up $1.46 to $22.55, Research) reported earnings of 32 cents per share, up from 25 cents a year earlier and 4 cents more than what analysts were expecting. Shares surged close to 7 percent.
Among other movers, shares of both Ford (down $0.46 to $12.93, Research) and General Motors (down $0.91 to $38.00, Research) declined.
The two automakers said Tuesday that the U.S. Securities and Exchange Commission has asked for details about their pension fund accounting. The request is part of a broader probe the SEC has opened into potential pension accounting misconduct at six companies.
Earlier in the day, Ford Motor (Research) reported improved results from a year earlier as strength in its financing arm helped temper weakness in its auto business.
Market breadth was negative. On the New York Stock Exchange, losers topped winners five to three as 1.73 billion shares changed hands. On the Nasdaq, decliners beat advancers three to two as 1.70 billion shares changed hands.
Morning economic news was mixed. Housing starts grew at a slower-than-forecast pace in September while building permits gained more than expected.
Consumer prices rose 0.2 percent in September, a separate report said. That was in line with estimates and up from 0.1 percent in August. So called "core" CPI, which strips out volatile food and energy prices, rose 0.3 percent, more than expected.
Treasury prices fell, pushing the 10-year note yield up to 4.07 percent from 4.04 percent late Monday. Bond prices and yields move in opposite directions.
In currency trading, the dollar slumped versus the yen and euro.
COMEX gold rallied $4 to settle at $421.60 an ounce.
Market turns negative after two-day rally. Worries about oil prices, insurance sector pace losses.
October 19, 2004: 5:57 PM EDT
By Alexandra Twin, CNN/Money Staff Writer
NEW YORK (CNN/Money) - Stocks slumped Tuesday, dragged down by still-high oil prices and a shredding in the insurance sector.
The Dow Jones industrial average (down 58.70 to 9,897.62, Charts) lost 0.6 percent and the broader Standard & Poor's 500 (down 10.79 to 1,103.23, Charts) index lost about 1 percent.
The Nasdaq composite (down 13.62 to 1,922.90, Charts) lost 0.7 percent.
Solid earnings from IBM and Texas Instruments had given investors something positive to latch on to in the morning, but the negatives won out in the afternoon.
Oil closed lower for a second straight session, but remained near record highs, keeping investors on edge.
Weakness in the insurance sector added to the pullback.
Declines were broad based, with 22 out of 30 Dow issues falling, including insurer AIG (down $1.98 to $57.70, Research).
“I think there are a few factors here,” said Sarat Sethi, portfolio manager at Douglas C. Lane & Associates. "Insurance stocks are getting hit with the Spitzer issue. People are nervous about that and are selling on the news."
Additionally, "oil is still up pretty high," he added. "And the earnings so far have been fine but aren't exactly blowing out the lights."
After the close Tuesday, Motorola (down $0.22 to $18.50, Research) reported earnings of 20 cents a share, up from a year ago and a penny more than expected. The No. 2 cell phone maker also reported revenue that rose from a year earlier but missed analysts' estimates. Shares fell more than 5 percent after the bell.
Earnings reports due before the open Wednesday include Dow components Honeywell (Research), JP Morgan Chase (Research), Pfizer (Research) and United Technologies (Research). Other companies due to report include Delta Air Lines (Research) and Lucent Technologies (Research).
(For a preview of these and other key earnings due this week, click here.)
Before the start of trade Thursday, the Conference Board releases its leading economic indicators. LEI probably fell 0.1 percent in September after falling 0.3 percent in August, according to Briefing.com forecasts.
Thursday also brings the Philadelphia Fed index, due shortly after the open. The index measures manufacturing in three states in the mid-Atlantic region. A rise of 18 in October from 13.4 in September is expected.
All eyes on oil, election
The major indexes managed a relief rally Friday, Monday and early Tuesday, as global oil supply shortage fears eased a bit and some of the earnings impressed. But that proved unsustainable Tuesday.
Trading is likely to remain choppy for at least the next couple of weeks, analysts say.
“There’s a pessimism about the economic growth that I think you see in the market,” said John Davidson, president and CEO at PartnersRe Asset Management.
Davidson said that economic growth is still intact, but is moving at a slower pace than it was several weeks ago, and that’s creating some of the nervousness for investors. The sustained higher oil prices have exacerbated those concerns.
U.S. light crude for November delivery fell 38 cents Tuesday to settle at $53.29 a barrel on the New York Mercantile Exchange, not far from the record closing high of $54.93 hit last Friday.
"I think there's also bound to be a lot of hesitation until the election is over," Davidson added. "After that, I think the market should be freer to move in line with earnings.”
Polls show the Nov. 2 election is basically a dead heat between President Bush and Sen. John Kerry.
Insurers under fire again
The insurance sector was in the spotlight again, with a number of stocks down in active trade.
The sector has been bleeding since New York Attorney General Eliot Spitzer sued Marsh & McLennan a week ago. The largest U.S. insurance broker was accused of bid-rigging in a suit that also included Dow component AIG.
Both AIG and Marsh & McLennan (down $1.47 to $24.10, Research) fell Tuesday.
Additionally, Spitzer's office is apparently turning its focus to health insurers.
UnumProvident (down $1.33 to $12.19, Research) said it received subpoenas regarding the way it compensated insurance brokers. Shares fell 10 percent.
Others in the sector fell too, including UnitedHealthcare (down $6.85 to $66.50, Research), which lost 9.3 percent.
IBM, TI impress
Both IBM and Texas Instruments released improved earnings after the close Monday.
IBM (up $3.45 to $89.37, Research) reported earnings of $1.17 per share, up from $1.02 a year earlier and 3 cents more than expected. The tech behemoth also said results for the rest of the year would top estimates. Shares rose 4 percent.
Texas Instruments (up $1.46 to $22.55, Research) reported earnings of 32 cents per share, up from 25 cents a year earlier and 4 cents more than what analysts were expecting. Shares surged close to 7 percent.
Among other movers, shares of both Ford (down $0.46 to $12.93, Research) and General Motors (down $0.91 to $38.00, Research) declined.
The two automakers said Tuesday that the U.S. Securities and Exchange Commission has asked for details about their pension fund accounting. The request is part of a broader probe the SEC has opened into potential pension accounting misconduct at six companies.
Earlier in the day, Ford Motor (Research) reported improved results from a year earlier as strength in its financing arm helped temper weakness in its auto business.
Market breadth was negative. On the New York Stock Exchange, losers topped winners five to three as 1.73 billion shares changed hands. On the Nasdaq, decliners beat advancers three to two as 1.70 billion shares changed hands.
Morning economic news was mixed. Housing starts grew at a slower-than-forecast pace in September while building permits gained more than expected.
Consumer prices rose 0.2 percent in September, a separate report said. That was in line with estimates and up from 0.1 percent in August. So called "core" CPI, which strips out volatile food and energy prices, rose 0.3 percent, more than expected.
Treasury prices fell, pushing the 10-year note yield up to 4.07 percent from 4.04 percent late Monday. Bond prices and yields move in opposite directions.
In currency trading, the dollar slumped versus the yen and euro.
COMEX gold rallied $4 to settle at $421.60 an ounce.
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