por admin » Jue Feb 24, 2011 2:29 pm
TODAY'S MARKETSFEBRUARY 24, 2011, 1:40 P.M. ET
Shares Slide for a Third Session
By DONNA KARDOS YESALAVICH
NEW YORK—Stocks fell for a third straight day on Thursday, as worries persisted over turmoil in Libya and how the resulting surge in oil prices might affect the U.S. economic recovery.
The Dow Jones Industrial Average, having fallen steeply in the two previous sessions, lost another 64 points, or 0.5%, to 12042, in midday trading. The decline put the measure on pace for its biggest three-day drop since mid-August.
All but a handful of the Dow's 30 components were in the red, led by a 2.4% drop in Hewlett-Packard and a 2.3% decline in Bank of America. Travelers shed 2%, Wal-Mart Stores declined 2%, and DuPont fell 1.8%.
Crude-oil futures traded above $100/barrel for a second day as the Libyan uprising continues to spook investors, and people start to look at the broader economic effects of $100 oil. Donna Kardos Yesalavich, Jerry DiColo and Paul Vigna report.
The Standard & Poor's 500-stock index shed 0.5% to 1301, with every sector in the red.
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Price of Oil Prompts Concern for Stocks
The energy sector posted the steepest drop, weighed down by refiners. Oil is a refinery's largest cost, so rising crude prices can weigh on profits if refiners aren't able to pass those costs on to customers through higher gasoline or heating oil prices. Tesoro tumbled 5.6%, while Sunoco fell 3.6%.
The declines came as crude-oil futures climbed above $99 a barrel as Libyan rebels controlling large swaths of the country promised an offensive against the capital, Tripoli. Analysts expressed concern that the turmoil could spread to other oil exporters in the region.
Investors fretted that the rising crude prices could hurt consumer spending and ultimately slow down the recovery of the U.S. economy.
"Higher crude prices will shift around where people have to spend their money," said Hank Herrmann, chief executive of Waddell & Reed Financial Inc. and the investment-policy committee of Ivy Investment Co. "Higher crude prices, especially if they go much higher, [are] going to correlate to slower economic growth and a higher inflation rate."
He added that the market is now being hit with "a double whammy: confidence eroding and the cost of energy going up," noting that "confidence has played an important role in the economic recovery."
U.S. economic data came in mixed. Initial jobless claims fell more than expected. But while durable-goods orders rose a bigger-than-expected 2.7% in January after three straight declines, the gain was driven mostly by a surge in demand for airplanes. New orders for non-defense capital goods excluding aircraft declined 6.9% last month.
In addition, sales of new homes tumbled last month, reversing most of the previous month's gains as the housing market started off the year on a weak footing.
The latest round of U.S. corporate earnings also was mixed.
Priceline.com posted a 73% jump in fourth-quarter profit as a rise in international bookings fueled top-line growth and margins surged. The company's core earnings topped analysts' estimates, and it gave upbeat guidance. The stock jumped 8% and helped lift the Nasdaq Composite, which edged up 0.1% to 2726.
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Target climbed 2.9%. The retailer's fourth-quarter earnings rose 11% as revenue improved. The company also benefited from sharply lower bad-debt expense at its credit-card arm.
Kohl's climbed 1.6%. The company projected 2011 earnings below Wall Street views, but investors were heartened to see the department-store operator's board authorize the first dividend in the company's history. It also increased the company's stock-buyback program.
General Motors reported $510 million in net income for the fourth quarter, a slimmer-than-expected profit because of increased spending on new vehicle programs, scaled back production of high-margin trucks and charges attached to last year's initial public offering. Its shares fell 5.4%.
Sears Holdings fell 4.7%. The retailer's fourth-quarter earnings slipped 13% as declining sales at its namesake stores continued to more than offset growth at its Kmart stores. The company on Wednesday announced a new chief executive after a three-year search: Lou D'Ambrosio, a long-time technology executive who had been consulting with the company.
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Stocks have fallen in the past two sessions as oil prices soar.
The U.S. Dollar Index, tracking the U.S. currency against a basket of six others, fell 0.3%. Treasurys rose, pushing the yield on the 10-year note down to 3.43%. Gold futures wobbled between small gains and losses.