U.S. Stocks Pare Losses As Oil Turns Lower
NEW YORK (MarketWatch) -- U.S. stocks moved mostly lower Tuesday for the first session in three as investors worried over J.P. Morgan Chase & Co.'s $1.5 billion write-down of mortgage-related assets, with the gloom only partially lifted as oil retreated to below $113 a barrel.
"Today we're giving back a little bit here. We were over the 1,300-level on the S&P [500] yesterday, that was looked at as a pretty good sign," said Linda Duessel, equity strategist at Federated Investors. "How this story plays out really depends on whether the weakness in financials bleeds out to other sectors in the economy."
Snapping a two-day winning streak that had the blue-chip index up 350 points, the Dow Jones Industrial Average was off 63.34 points at 11719.01 in late morning trading, with 20 of its 30 components chalking up losses. The declines were led by financials, including J.P. Morgan , off 6.1%, and American International Group Inc. , down 3.8%.
General Motors Corp. fronted blue-chip gains, with shares of the automaker gaining 6.9%.
The S&P 500 declined 10.39 points to 1,294.92, with financials also fronting declines among the index's 10 industry groups, off 1.9%, followed by utilities, down 1.7%.
Materials and consumer staples fronted sector gains on the S&P, the former up 0.4% and the latter gaining 0.3%.
The technology-heavy Nasdaq Composite climbed 1.18 points to stand at 2,441.13.
Volume on the New York Stock Exchange neared 404 million shares, with declining stocks outgunning those advancing 3 to 2. On the Nasdaq, nearly 332 million shares traded, and decliners topped advancers 7 to 6.
Weighing on the blue-chip index as well as the broader market was the disclosure late Monday by J.P. Morgan of $1.5 billion in housing market-related losses since July, the latest illustration that the credit crisis remains an ongoing concern.
In addition, Wachovia Corp. has added another $500 million reserved for a regulatory settlement to its previously reported second-quarter loss as the nation's biggest banks try to untangle themselves from the ongoing credit turmoil. .
Other negative news from the banking sector included a second-quarter loss of more than $300 million by Swiss banking giant UBS AG , which is splitting its investment banking from its wealth management arms after nervous clients withdrew about $40 billion in cash during the quarter. .
The gloomy figures come on the same day as the scheduled expiration of Securities and Exchange Commission rules prohibiting short selling. The SEC is expected to propose a formal rule.
Energy prices offset losses
The issues plaguing financial shares have recently been offset by a decline in crude, which has revived hopes that less expensive energy costs would translate into improved consumer and business spending, brightening the outlook for corporate earnings.
On Tuesday, crude-oil futures were back on the decline after an earlier rise, with the contract for September delivery off $1.90 to stand at $112.55 a barrel. .
The recent drop in energy costs has eased some worries about inflation, Minneapolis Federal Reserve President Gary Stern said in an interview on CNBC. Stern, a voting member of the Federal Open Market Committee, also reiterated previous comments that the Fed will need to raise interest rates quickly once the central bank is confident of an economic recovery.
Elsewhere, the Commerce Department's estimated that the U.S. trade gap narrowed by 4.1% to $56.8 billion in June on record exports and a decline in non-oil imports. .
"One good piece of news for today was [that] the trade deficit came in much better than expected. Our exports were still very strong," said Duessel.
Shares of airlines including AMR Corp. gained after a positive J.P. Morgan note.
Russian stocks rallied on the declaration of the end of the Georgia fighting, with the RTS index surgig 3.7%.
The pan-European Dow Jones Stoxx 600 index fell 0.3% at 292.01 . The Nikkei 225 ended 1% lower in Tokyo. .
By Kate Gibson