U.S. Stocks Wabble After Thursday Plunge As Oil Tops $142
NEW YORK (MarketWatch) -- Stocks wabbled in and out of positive territory Friday, unable to bounce back a day after the market plunged on renewed concerns about financials, credit conditions and oil topping $140 for the first time.
With crude oil hitting a new high at $142.26 a barrel before the open, the market remained worried about the impact of surging commodities prices on consumers. A survey by the University of Michigan revealed consumer confidence.
"We're getting to the stage now where rising oil prices are really starting to bite," said Richard Batty, director of strategy at Standard Life Investments. "They're causing a crimping in terms of retail spending and consumer confidence."
After closing Thursday at its lowest level since September 2006, the Dow Jones Industrial Average [ was last off 18 points, or 0.2%, at 11,435.
Of the Dow's 30 components, 14 still advanced, with investors buying battered financial components American Express , Citigroup , and JP Morgan Chase .
American International Group fell 1%, after the insurance giant said it will absorb $5 billion in losses from securities lending, Bloomberg News reported, citing an executive there.
But powered by the energy and financial sectors, the S&P 500 index rose 2.4 points to 1,285. The Nasdaq Composite dipped 3.3 points to 2,318.
Tech shares fell further, with Palm losing 6.6% as the loss-making handset device maker reported a worse-than-forecast 26% sales fall and didn't give an outlook.
Sony Ericsson, the equally-owned mobile phone venture of Sony and Ericsson , warned of slowing demand for mid-to-high level phones. Ericsson shares fell 6.4%.
Before the open, stocks futures came off lows after May core inflation, which excludes food and energy, came in lower than forecast, reducing speculation that the Federal Reserve will have reason to raise interest rates this year.
Stocks were crushed on Thursday after tepid earnings outlooks from technology bellwethers Oracle Corp. and Research In Motion , negative notes from Goldman Sachs on brokers and General Motors , and oil prices reaching $140 a barrel.
The Dow plunged 358 points, the S&P 500 lost 38 points and the tech-heavy Nasdaq slumped 79 points.
Standard Life's Batty said the drop in stock markets over the last couple of sessions is justified given the rise in oil, and the fact that investors are reassessing the earnings outlook of those companies that haven't been negatively impacted so far.
The dollar fell 0.1% to 106.39 yen. Gold futures rose $6.50 to $921.70 an ounce. Both the dollar/yen cross and gold are seen at times as measures of risk appetite and fear.
KB Home was in the spotlight as the builder is expected to join Lennar in reporting a quarterly loss.
As expected, Anheuser-Busch formally rejected InBev's $46 billion, or $65-a-share takeover offer.
By Nick Godt