US stocks dip
US stocks crept lower today as Wall Street steadied itself after last week’s losses and waited for the Federal Reserve’s meeting on interest rates.
Fears that second-quarter earnings could disappoint also weighed on the market.
The Fed’s Open Market Committee is widely expected to raise rates for the ninth time in a year when it meets on Wednesday and Thursday, but investors are waiting to see policymakers’ assessment of the economy, to be issued at the end of the meeting.
Until the Fed’s intentions are clear, investors are likely to do very little, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. “Is this the ninth inning or are we going into extra innings?” he said.
Wall Street looked past record high oil prices. A barrel of crude oil climbed as high as US$60.95 (€50.10) before closing at US$60.54 (€49.75) a barrel, up 70 cents, on the New York Mercantile Exchange.
The increase came amid concerns that supplies would not meet demand, worries about refining capacity and news that Iran’s new president would be focusing on its domestic market instead of exports.
Analysts said prices could climb even higher, but for the moment, Wall Street did not seem particularly worried.
“The market seems to be shrugging off oil a little bit,” said Brian Gendreau, investment strategist at ING Investment Management. “Perhaps there’s a feeling that the selloff Friday was overdone.”
The Dow Jones industrial average was down 7.06, or 0.07%, at 10,290.78 after falling nearly 290 points on Thursday and Friday combined.
Broader stock indicators were down. The Standard & Poor’s 500 index was down 0.88, or 0.07%, at 1,190.69, and the Nasdaq composite index was down 8.07, or 0.39%, at 2,045.20.
Another factor that may keep stocks nearly flat in coming sessions is that analysts have slightly lowered expectations for second-quarter earnings, Ablin said. This is the first quarter of the last six where expectations have fallen.
Several companies issued warnings today.
International Paper Co fell 1.02 cents to 31.43 after the company said second-quarter earnings would miss estimates because of weaker paper and packaging sales.
Cardinal Health Inc fell 4.08 to 56.43 after the company said investments in research and development and infrastructure would push 2006 earnings well below estimates.
And athletic wear maker Nike fell 3.58 to 85.77 after the company’s earnings rose at a lower rate in the fourth quarter than the previous three quarters. The company also did not offer a 2006 earnings outlook.
Bonds were up slightly, with the yield on the 10-year Treasury note falling to 3.90% from 3.92% late on Friday. The dollar was unchanged against the euro. Gold prices were unchanged.
In today’s stock trading, some industries were strong, while others faltered. “It’s still a sector story,” Ablin said. “You’ve got very calm water, with a lot of stirring underneath the surface.”
Energy and utility stocks did well, thanks to increasing oil prices, but technology, health care and consumer staples lost ground, due to fears of an economic slow down.
TiVo Inc rose 18 cents a share to 6.98 on news that Vice Chairman Tom Rogers will replace Mike Ramsay as the company’s president and chief executive from July 1. Rogers, the former chairman and CEO of media publisher Primedia, joined TiVo in 1999 and became vice chairman of the board in October 2004. Ramsay, TiVo’s co-founder, announced plans to step down from his post in January after seven years in the position.
Morgan Stanley was down 7 cents at 53.05 as media reports said former top executive John Mack was close to returning to the beleaguered Wall Street firm as its new chief executive officer.
Declining and advancing issues were even on the New York Stock Exchange, where volume totalled 1.36bn shares, down from 2.04bn at the same time Friday.
The Russell 2000 index of smaller companies was down 2.10, or 0.33%, at 628.31.
