Posted on: Saturday, June 25, 2005
Markets feel oil-price rise
By Michael J. Martinez
Associated Press
NEW YORK — Rising oil prices plagued Wall Street again yesterday as the Dow Jones industrial average suffered its second straight 100-point-plus loss, ending a week dominated by concerns that energy costs would soon eat into corporate profits. All three indexes finished the week substantially lower.
Investors overlooked decent economic news, choosing instead to focus on oil. Transportation and manufacturing companies — considered the most oil-dependent — were hardest hit, though the selling was spread throughout the market as crude oil futures threatened to top the psychologically significant $60-per-barrel barrier for the second day in a row.
"The crude situation is a big concern right now," said Brian Williamson, an equity trader at The Boston Company Asset Management. "People aren't really looking at the economic numbers."
Even the economic data, while mostly positive, raised some concerns. The Commerce Department reported a 5.5 percent rise in orders to U.S. factories for big-ticket manufactured goods last month, but much of that was due to a surge in demand for commercial aircraft. With transportation orders removed, durable goods orders fell 0.2 percent in May, the third decline in the past four months.
The Dow Jones industrial average fell 123.60, or 1.19 percent, to 10,297.84, after plunging more than 166 points the previous session.
The broader gauges, which also posted big losses Thursday, were down as well. The Standard & Poor's 500 index dropped 9.16, or 0.76 percent, to 1,191.57. The Nasdaq composite index lost 17.39, or 0.84 percent, to 2,053.27.
Also adding volatility to the market, institutional investors were adjusting their portfolios to reflect the annual rebalancing of the Russell indexes.
The bond market reflected investors' uncertainty, making substantial gains as stocks dropped. The yield on the 10-year Treasury note fell to 3.92 percent, down from 3.96 percent late Thursday.
The dollar fell against most major currencies and gold prices also lost ground.
Crude oil futures were up 42 cents at $59.84 per barrel on the New York Mercantile Exchange, coming one day after oil prices surged past the $60 per barrel level for a new intraday high.
With few earnings reports and a relative dearth of economic news, oil remained the market's focus for nearly the entire week. The drop in stock prices Thursday effectively ended, at least for the short term, the market's recent rally. For the week, the Dow lost 3.06 percent, the S&P fell 2.09 percent, and the Nasdaq dropped 1.76 percent.
In other economic news, sales of new homes climbed to the second-highest level in history, but median home prices fell sharply in May.
Declining issues outnumbered advancers by nearly 5 to 3 on the New York Stock Exchange, where final consolidated volume was 2.49 billion, compared with 2.02 billion traded on Thursday.
