Posted on: Friday, September 24, 2004
Oil prices fuel blue-chip selloff; techs up slightly
By Michael J. Martinez
Associated Press
NEW YORK — Investors extended their blue chip selloff yesterday as oil prices neared their all-time highs, renewing Wall Street's concerns that high energy costs would deflate third-quarter earnings. Only the Nasdaq composite index managed a minimal gain.
Oil prices also were blamed, in part, for a lower reading on the Conference Board's index of leading economic indicators, the third straight monthly decline. Investors believed the forward-looking index sent a signal that economic growth has been slowing and would likely taper off through the end of the year.
"When you take a look at the leading economic indicators, it's very clear that the price of oil is having an impact on the economy," said Hugh Johnson, chief investment officer at First Albany Corp.
Stocks listed on the tech-focused Nasdaq were generally oversold far more this year because of a weaker technology sector, and the retreat in blue chips was seen as bringing their valuations back in line with the small-cap stocks common to the Nasdaq.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where consolidated volume came to 1.64 billion shares, compared with 1.8 billion on Wednesday.
Analysts said oil prices, which continued their climb after shooting past $48 Wednesday, would keep consumer spending down and business costs rising, a combination that will squeeze profit margins and lower third-quarter earnings. A barrel of light crude settled at $48.46 yesterday, up 11 cents on the New York Mercantile Exchange, after reaching an intraday high of $49. Crude futures closed at a record high $48.70 on Aug. 19 and set a new intraday record of $49.20 on Aug. 20.
