U.S. Stocks Losing Gains As Oil Prices Climb
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday shed the bulk of earlier gains as escalating oil prices dampened enthusiasm sparked by better-than-expected profits from blue chips including J.P. Morgan Chase & Co., United Technologies Corp. and Intel Corp.
"One of the negative catalysts on the market this week is the rising price per barrel of crude oil; for the first time in the better part of a year we had a significant increase in commodity prices that is not tied to supply and demand, but geopolitical concerns," said Art Hogan, chief market strategist at Jefferies & Co.
Wall Street's about-face coincided with another record rise in crude-oil futures as well as comments by President Bush, who told a White House news conference that the United States is trying to discourage Turkey from sending troops into Iraq. .
"Unfortunately this particular leader of the free world has never made the market go up by talking," said Hogan.
Up about 100 points early on, the Dow Jones Industrial Average recently lapsed 53 points to 13,859.9, with 15 of its 30 component stocks in positive territory.
The S&P 500 dropped 2.31 points to 1,536.28, while the technology-laden Nasdaq Composite clung to some of its strength, rising 13.63 points to 2,777.46.
Crude-oil futures surged to a new intraday record of $89 after news reports that Turkey's parliament authorized a cross-border military offensive into northern Iraq to hunt down Kurdish rebels. After its spike to a new high, crude again quickly pared gains and was last up 34 cents at $87.95. .
Volume on the New York Stock Exchange totaled 678 million, and declining stocks topped advancing issues 16 to 15. On the Nasdaq, more than 1.2 billion shares traded hands, and declining stocks ran just ahead of advancers.
Technology lifted by earnings
Reversing course after two days of losses, stocks had moved broadly higher in the early going, on positive earnings from the technology sector.
"Better-than-expected results from bellwether technology names gave us faith that this technology-led rally could continue through this earnings season," said Hogan.
Chipmaker Intel reported a 43% quarterly profit rise late Tuesday, and fellow Dow components United Technologies , J.P Morgan Chase and Coca-Cola Co. all checked in with higher earnings before the bell.
The government reports included word from the Labor Department that U.S. consumer prices climbed 0.3% in September on higher food and energy costs. Core inflation, which strips out the volatile food and energy categories, rose 0.2% for the fourth month in a row. .
"You would have had to be asleep not to know food and gas prices were up significantly. But when you flip to core inflation, it came in right as advertised," said Bill Stone, chief investment officer at PNC Wealth Management.
"This stuff didn't get in the way of the story," said Stone of investors' focus on corporate profit reports, noting that this "took away some of the market worry."
The government also reported U.S. housing starts in September fell 10.2% to a seasonally adjusted annual rate of 1.19 million, with the decline proving larger than expected. .
"There's a lot of inventory and projects in process, until those projects are complete, starts won't go up," said Bob Moulton, president of the Americana Mortgage Group.
"It's going to be a long cold winter, and once heating bills in the northeast and northwest start kicking in, and mortgage payment comes in, people who have been holding on maybe won't be able to. I think it will get a little worse before it gets better," said Moulton.
More surprising, Moulton said, is the 0.7% rise in mortgage applications last week contained in the latest survey by the Mortgage Bankers Association.
"We're seeing a lot of applications come in, but not necessarily a lot of closing go out; the reason being, people stillthink they can get that investment property with a mediocre credit score and 10% down," Moulton said.
By Kate Gibson