Wall Street Stumbles In Spite of Oil’s Drop

Wall Street succumbed to its ongoing angst today, giving up a sharp advance and turning moderately lower after falling oil prices failed to calm the market’s nervousness about the economy and the financial sector.The Dow Jones industrial average initially surged by nearly 250 points as oil prices dropped as low as $105.46 a barrel on reports that the Gulf Coast and its oil facilities were spared heavy damage from Hurricane Gustav. But the positive effect of the storm’s outcome on stocks was short-lived, and the blue chips ended the day down 26.Falling commodities prices caused the stocks of oil and metals companies to sink, dragging on the broader market, and the technology sector was also weak. Furthermore, crude oil eventually lifted off its lows of the day, settling near $110 a barrel and signaling to some traders that oil has the potential to rebound as quickly as it sold off.“We could have another storm announced tomorrow, and it’d be back up again,” the managing director and head trader for BNY ConvergEx Group, Anthony Conroy, said.The financial sector was stronger than usual today, but not enough to lift the stock market. Investors remain fearful that a weak housing market and tight credit environment will keep racking up losses for the nation’s major money centers.“The one problem with financials is that maybe the Street has a good handle on subprime, but they do not have a good handle on commercial or industrial lending,” the managing director of equity strategy at RBC Wealth Management, Philip S. Dow, said.Due to the high level of uncertainty in the market — not to mention low summer trading volumes, which tend to add to volatility — investors recently have appeared to be aiming for quick, day-to-day profits as opposed to committing to a long-term strategy, Mr. Dow said.“We’ve had this manic tape for some time,” he said. “By and large, it’s just a market that’s victim to whatever the news of the day is, without a whole lot of conviction.”The Dow fell 26.63, or 0.23%, to 11,516.92. On Friday, the blue chip index lost 171 points. The biggest drop among the 30 Dow components came from aluminum producer Alcoa Inc., which fell $1.67, or 5.2%, to $30.46.Broader stock indicators also turned lower after moving sharply higher in early trading. The Standard & Poor’s 500 index fell 5.25, or 0.41%, to 1,277.58, and the technology-dominated Nasdaq composite index fell 18.28, or 0.77%, to 2,349.24.Advancing issues outnumbered decliners, however, by about 8 to 7 on the New York Stock Exchange, where consolidated volume came to 4.67 billion shares, up from 3.14 billion on Friday.Light, sweet crude fell $5.75 to settle at $109.71 a barrel on the New York Mercantile Exchange.Bond prices shot higher as Wall Street gave up its gains. The yield on the benchmark 10-year Treasury note, which moves opposite its price, sank to 3.74% from 3.82% late Friday. The dollar strengthened against most other major currencies, while gold prices fell sharply.The Institute for Supply Management, a trade group of purchasing executives, said Tuesday its index on manufacturing activity fell marginally to 49.9 in August — as expected — from 50 in July. A reading below 50 indicates contraction. The ISM also found that inflation lessened.The chief investment officer at MTB Investment Advisors in Baltimore, Bill Dwyer, said the reactions of the energy and stock markets today illustrate the overall uncertainty about the economy.“It just shows you how unstable the market is based on the perception of the macro economic outlook. It changes daily. There isn’t a consistent viewpoint of what is actually happening in the economy,” he said.Financials ended mostly higher today, but trading was erratic; investors remain extremely skittish about financial services companies, given the billions of dollars in risky loans and securities that remain on their books.Lehman Brothers Holdings Inc. rose but pared larger gains after the governor of the state-owned Korea Development Bank said discussions were under way to set up a consortium with private banks to acquire Lehman. The comments follow weeks of speculation that the investment bank could be bought as it struggles amid tightness in the credit markets.Lehman shares rose 4 cents to close at $16.13.A few financial stocks weakened, including Merrill Lynch & Co., which fell 60 cents, or 2.1%, to $27.75.The drop in oil prices sent airline stocks higher. American Airlines parent AMR Corp. jumped $1.17, or 11.3%, to $11.50, Delta Air Lines Inc. rose $1.04, or 12.8%, to $9.17, while JetBlue Airways Corp. rose 25 cents, or 4.1%, to $6.32.But energy names fell. Exxon Mobil Corp., one of the 30 Dow industrials, fell $2.69, or 3.4%, to $77.32, while Chevron Corp., another Dow component, lost $3.03, or 3.5%, to $83.29.Most technology companies declined as well. One of the most actively traded stocks in the Nasdaq composite index was Dell Inc., which on Friday reported disappointing quarterly results and set off a string of estimate cuts by analysts.Dell shares extended their declines, falling by 90 cents, or 4.1%, to $20.83.The Russell 2000 index of smaller companies fell 0.99, or 0.13%, to 738.51.Overseas, Japan’s Nikkei stock fell 1.75%. Britain’s FTSE 100 rose 0.32%, Germany’s DAX index rose 1.51%, and France’s CAC-40 advanced 1.50%.

Wall Street Stumbles In Spite of Oil’s Drop

Wall Street Stumbles In Spite of Oil’s Drop

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