US stocks mixed as oil tops US$75 a barrel
Wall Street gave up early gains and closed mostly lower today after oil prices topped US$75 (€60.78) a barrel for the first time.
The Dow Jones industrial average crept higher on strong earnings from 3M, and stocks overall managed a gain for the week.
The Dow rose 4.56, or 0.04%, to close at 11,347.45. On Thursday, the Dow had its best close since reaching 11,351.30 on January 20, 2000.
Broader stock indicators were lower. The S&P 500 fell 0.18, or 0.01%, to 1,311.28, while the Nasdaq composite index fell 19.69, or 0.83%, to 2,342.86. An analyst’s downgrade of Dell helped send technology stocks lower.
Investors’ inflation fears intensified as oil prices climbed to a new record, rising US$1.48 (€1.20) to settle at US$75.17 (€60.92) a barrel on the New York Mercantile Exchange.
The continued gains in oil, gold and bond yields are keeping inflation worries at the forefront, said Ken Tower, chief market strategist for Schwab’s CyberTrader. Evidence of economic growth in next week’s reports will renew the debate over when the Federal Reserve might halt its rate tightening.
“The Fed is going to have a hard time stopping their increases if the economy seems to be gaining strength,” Tower said. “I think the Fed will have a very hard time talking down the inflation hawks if the data comes in stronger than expected.”
Bonds edged higher, with the yield on the 10-year Treasury note slipping to 5.00% from 5.04% on Thursday. The US dollar was mostly lower against other major currencies; gold prices rose and lingered at 25-year highs.
The major indexes ended the week with gains. The Dow rose 1.88%, the S&P 500 index rose 1.72% and the Nasdaq gained 0.72%.
Analysts say next week’s trading will depend on the market’s interpretation of the latest government reports, which include first-quarter GDP, employment costs, new home sales and consumer confidence.
Google’s earnings pushed its stock up 22.10, or 5.3%, to 437.10, but the technology sector stumbled after Citigroup cut computer maker Dell to “sell” on concerns about slowing growth and weakening margins. EBay also saw a second day of losses following its lacklustre quarter. Dell sank 1.23 to 27.01, and eBay fell 1.68 to 35.09.
Ford posted its biggest deficit in more than four years after taking US$1.7 bn (€1.38bn) of pre-tax charges from its costly North American restructuring plan. Sales slid 9% amid a continued slump in US vehicle demand. Ford fell 63 cents to 7.32.
Dow industrial 3M rose 2.46 to 85.06 after saying its quarterly profit swelled 17% on a sturdy rise in sales. The market was also encouraged by 3M’s increased outlook.
Fellow Dow component McDonald’s said its earnings dropped 14% from the year before, when a tax break boosted its results. However, sales grew 6% to top Wall Street estimates. McDonald’s slid 48 cents to 34.60.
Drug company Wyeth’s profit advanced 4% from strong sales of antidepressant Effexor and heartburn medication Protonix. Wyeth climbed 73 cents to 47.50.
Advancing issues led decliners 17 to 15 on the New York Stock Exchange, where volume of 1.77bn shares was below the 1.78bn shares changing hands on Thursday.
The Russell 2000 index of smaller companies fell 2.55, or 0.33%, to 772.12, after spending most of the day in positive territory.
Elsewhere, Japan’s Nikkei stock average rose 0.5%, the FTSE 100 gained 0.84%, Germany’s DAX index added 0.52%, and France’s CAC-40 ended 0.88% up.
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