Oil price uncertainty sees mixed results for US stocks
Wall Street had an erratic trading session today, closing mixed as investors nervously watched oil prices but were also encouraged by good economic news.
Stocks moved in the opposite direction from oil prices for much of the day, declining until early afternoon as crude climbed to 44.34 a barrel on the New York Mercantile Exchange.
As oil fell below 43 on the way to a 42.83 close, Wall Street managed a late-session rally – but that advance quickly fizzled.
Stocks also received a boost from two key economic reports. Factory orders rose 0.7% in June, more than Wall Street expected. And the Institute of Supply Management’s service sector index for June rose more than economists had forecast.
The Dow Jones industrial average rose 6.27, or 0.1%, to close at 10,126.51.
Broader stock indicators were narrowly lower. The Standard & Poor’s 500 index was down 1.06, or 0.1%, at 1,098.63, and the Nasdaq composite index dropped 4.36, or 0.2%, to 1,855.06.
Although the rally lost wind at the end of the session, the Dow enjoyed its fourth late-day rally in the past six sessions.
Oil prices remain a concern, since higher fuel costs could trickle down to the consumer as food producers and major retailers will pay a higher cost in shipping.
“Combine (higher oil prices) with a slowdown in consumer spending, that makes it very hard for anyone to get into the market right now,” said Neil Massa, an equity trader at John Hancock Funds.
But today’s economic figures were an encouraging sign that the economy’s spring “soft spot” may not have lasted. Factory orders for June were higher than the 0.4 rise in May. And orders for durable goods rose 0.9% in June, up from a 0.9% decline in May, the Commerce Department said.
A key test for the economy and the markets will come on Friday as the government releases job creation figures.
Next Tuesday’s Federal Reserve meeting will also be closely watched for signs that it might back off on raising interest rates aggressively.
In the meantime, technology shared suffered as telecom company Ciena Corp warned that sales would slump significantly in the third quarter. Ciena fell 68 cents, or 25%, to 2.08.
Prudential Financial, whose headquarters was named in this week’s terror alert as a possible target, gained 60 cents to 46.36 as it reported a fourfold increase in quarterly earnings.
The financial company posted earnings that were 19 cents a share more than expected.
CVS Corp beat Wall Street estimates by 2 cents per share in its latest earnings statement, reporting a 17% rise in profits. The pharmacy chain was down 56 cents at 41.21.
Insurer Cigna fell 1.98 to 60.60 despite beating estimates by an impressive 50 cents per share.
The company swung to a profit from a year-ago loss and boosted its earnings outlook as well.
Clothiers Polo Ralph Lauren and Tommy Hilfiger both managed to surpass expectations, with Polo Ralph Lauren doubling its profits on the strength of its women’s line, and Hilfiger posting a less-than-expected loss due to slumping wholesale revenues.
Polo Ralph Lauren rose 1.44 to 34.56, while Hilfiger was up 49 cents at 13.78.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where volume was light.
The Russell 2000 index of smaller companies was down 0.96, or 0.2%, at 542.67.
