NEW YORK (AP) -- Wall Street fluctuated Monday as investors watched the price of oil regain ground and decided to cash in some of their gains from the market's big rally last week.
Oil rose on concerns that the threat of new sanctions against Iran over its nuclear program may escalate tensions in the Middle East. Light, sweet crude was up $1.72 to $130.60 a barrel on the New York Mercantile Exchange.
That offset initial market enthusiasm after Bank of America Corp. posted results that beat expectations, raising hope the credit crisis might be easing for the nation's biggest retail banks. The largest U.S. bank by assets reported that higher investment banking and record revenue helped drive earnings during the second quarter.
With BofA's results, four of the nation's five biggest banks have now reported better-than-expected earnings, and that's raising hopes that the financial sector is starting to recover from the year-old credit crisis.
"With crude trading up near $130, and a big advance last week, some investors are taking chips off the table," said Jim Herrick, manager of equity trading at Baird & Co. "We're going to be in a tight trading range this week based on earnings and oil prices. I expect more of the same."
The market was also uneasy about earnings at drug makers Merck & Co. and Schering-Plough Corp. Both pharmaceutical companies fell after a new study showed their cholesterol drug Vytorin did not meet its main goals. They also took the unusual step of delaying their second-quarter results until after the closing bell to allow researchers time to present the report.
In midafternoon trading, the Dow Jones industrial average fell 38.59, or 0.34%, to 11,457.98 after moving in and out of positive territory.
Broader indexes were narrowly mixed. The Standard & Poor's 500 index rose 1.06, or 0.08%, to 1,259.62; and the Nasdaq composite index dropped 3.32, or 0.15%, to 2,279.46.
On Friday, Wall Street closed out an impressive week: The Dow rose 3.57%, the Nasdaq increased 1.95%, and the S&P rose 1.71%.
Bond prices were little changed Monday as investors waited for stocks to take a more clear direction. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 4.09% from late Friday.
The dollar was mixed against other major currencies, while gold prices rose.
Ryan Detrick, senior technical strategist at Schaeffer's Investment Research, said the market is feeling somewhat upbeat about how earnings are shaping up so far this quarter. And that's helped to maintain some of last week's market gains, despite the pullback on Monday.
"We're having some more good news from the financials -- it wasn't as bad as feared," he said. "And we've also got some buyout deals."
Some 158 members of the Standard & Poor's 500 index and 10 members of the Dow Jones industrials are slated to post results this week. The biggest on Monday was BofA, which reported an increase in bad debts due to the ongoing housing slump pushed profit down 41%. However, it still surpassed expectations due to a solid performance in its non-real estate businesses. Shares rose $1.90, or 7%, to $29.37.
Investors also were somewhat optimistic that mergers and acquisitions, which have been sluggish since the credit crisis began last year, might be reviving. Swiss drug maker Roche Holding announced plans to acquire the stake in Genentech Inc. it doesn't already won for $43.7 billion, making it the seventh-largest pharmaceuticals company in the U.S.
Shares of Genentech were among the best performers during the session, rising $10.83, or 13.2%, to $92.63.
Yahoo Inc. fell 67 cents, or 3%, to $21.77 after the Internet portal staved off an attempt by activist shareholder Carl Icahn to take control and sell it. Icahn, who has argued in favor of selling Yahoo to Microsoft Corp., will become a Yahoo director along with two of his nominees.
Toymaker Hasbro Inc. said second-quarter profit rose, helped by the weaker dollar and demand for toys inspired by Star Wars and Indiana Jones. Sales jumped 13% to $784.3 million. However, concerns about costs and a campaign to raise prices pushed shares down $1.55, or 4.1%, to $36.44.
In economic news, Treasury Secretary Henry Paulson sought to reassure the public Sunday that the banking system is sound, while also preparing people for more troubled times ahead. "I think it's going to be months that we're working our way through this period -- clearly months," he said.
And that was confirmed by more economic data Monday. The Conference Board said the economy contracted in June as factories cut workers' hours and stocks tumbled. The research group's index of leading economic indicators, a gauge of future economic activity, fell 0.1%, in line with estimates by Wall Street economists surveyed by Thomson Financial/IFR. It also revised its May figure to show a decline instead of slight growth.
Declining issues led advancers by a 5-to-4 basis on the New York Stock Exchange, where volume came to 683 million shares.
The Russell 2000 index of smaller companies rose 3.07, or 0.44%, to 696.15.
Comments
Post a comment
(Requires free registration.)