US stocks continue decline
Wall Street’s 2005 slump extended into a third session today as renewed concerns about inflation and higher interest rates sapped confidence from buyers.
Investors were still digesting the latest news from the Federal Reserve’s Open Market Committee, which sent stocks tumbling yesterday when it released the minutes of its December 14 meeting.
Several members of the policy making group expressed concerns about US inflation, citing a drop in productivity growth, a weakening dollar and high oil prices, and hinted that interest rates were likely to be tightened more aggressively to deal with those issues.
“There’s a lot of indecisiveness today,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “Sellers got washed out late yesterday and today, and the market found a level where it had been trading a month or so ago and it’s holding its ground. But because of what happened yesterday, you’re not seeing that much conviction in the market.”
The Dow Jones industrial average lost 32.95, or 0.31%, to close at 10,597.83, after staying in positive range for most of the day.
The broader gauges were also lower. The Standard & Poor’s 500 index declined 4.33, or 0.36%, to 1,183.72. The Nasdaq composite index was down 16.62, or 0.79%, at 2,091.24.
The market’s action during the first few trading days of the year was somewhat unusual, particularly since 2004 ended on such a positive note, and with such high expectations for January.
However, after the kind of rally investors enjoyed in the last days of December, some pullback was to be expected, said Arthur Hogan, chief market analyst at Jefferies & Co.
“Yes, we expect earnings to be good, and yes, we expect good things out of corporate America, but we had a significant run-up and now we have to consolidate, and some folks are taking some profits,” Hogan said. “I wouldn’t write off 2005, I wouldn’t write off January, but I’d say that’s what’s behind the cautious attitude of investors.”
Crude futures fell after the US government reported sizeable increases in petrol and heating oil inventories. Light, sweet crude for February delivery shed 52 cents to 43.39 a barrel on the New York Mercantile Exchange.
The US Energy Department reported supplies of distillate fuel, which include heating oil and diesel, grew by 2 million barrels last week to 121.1 million barrels, sharply higher than expected, though still below year-ago levels. The tight but growing supply of heating oil comes amid relatively mild winter weather in the US Northeast.
Delta Air Lines was down 51 cents, or 7 %, at 6.80, after the carrier said it was cutting domestic fares by up to 50% and scrapping its unpopular Saturday-stay requirement in a move to lure back customers. The airline’s SimpliFares plan comes as Delta fights to stay out of bankruptcy.
Among retailers, Nordstrom was up 1.44 at 47.06 after saying December sales rose a better than expected 9.3%. Despite the strong sales, company executives said in a conference call they were comfortable with their current forecast for the fourth-quarter.
Circuit City Stores Inc. slid 8.4%, or 1.25, to 13.71, after reporting disappointing sales for December. The company said its consumer electronics stores were operating efficiently, but holiday customer traffic was down.
Decliners outnumbered advancing issues by more than 2 to 1 on the New York Stock Exchange. Volume was heavy.
The Russell 2000 index, which tracks smaller company stocks, was down 11.06, or 1.76%, at 617.48.
