Dow falls 395 points in 3 days
source : http://money.cnn.com/2006/07/14/markets/markets_newyork/index.htm
Record oil prices, Mideast violence, signs of a slowing economy hit markets; Dow falls 395 points in 3 days.
NEW YORK (CNNMoney.com) — Stocks slumped for a third session Friday as record oil prices, escalating violence in the Mideast and sluggish retail sales all weighed on investors.
The Dow Jones Industrial average (down 112.05 to 10,734.24, Charts) fell about 1 percent three hours into the session after tumbling almost 3 percent the prior two days.
The world’s most widely watched stock market gauge is now within shouting distance of falling into the red for the year. The S&P 500 and Nasdaq composite are already in negative territory.
The broader Standard & Poor’s 500 (down 10.61 to 1,231.68, Charts) index slipped 0.9 percent and the Nasdaq composite (down 19.94 to 2,034.17, Charts) slid about 1 percent.
The stock market has been tumbling since Wednesday, amid increased fighting between Israel and Lebanon’s Hezbollah that’s sent oil prices to record highs.
At the same time, investors are worried about second-quarter corporate profits, with the first big batch of companies due next week.
In just 2-1/2 sessions — between the close of trade Tuesday and midday Friday — the Dow has lost around 400 points.
The latest selloff is part of a broader pullback that has socked markets since late May. After hitting a 2006 high on May 10, the Dow has now lost roughly 8 percent of its value, first on worries about a slowing economy and rising interest rates, and now on global concerns.
“I think the selling we’ve seen since Wednesday is mostly in response to the Mideast situation,” said Ron Kiddoo, chief investment officer at Cozad Asset Management. “And today there are new worries about rising energy costs hurting consumer spending, because of the retail sales report.”
The onslaught of earnings in the next few weeks should be positive for markets, he added, but is likely to have only a muted impact until the geopolitical unrest is perceived as having stabilized.
Retail sales disappoint
June retail sales fell a surprising 0.1 percent, the Commerce Department said Friday morning. The drop reflected the impact of surging gas prices on consumer spending. Economists surveyed by Briefing.com thought sales would rise 0.4 percent.
Sales excluding autos rose 0.3 percent, as economists had expected.
Separately, the University of Michigan’s July consumer sentiment index fell to 83 versus expectations of a rise to 85.5.
U.S. light crude oil for August delivery rose 55 cents to $77.25 a barrel on the New York Mercantile Exchange, after hitting a record high of $78.40 earlier in electronic trading.
COMEX gold for August delivery jumped $11.60 to $666 an ounce.
Treasury prices inched higher, lowering the yield on the benchmark 10-year note to around 5.06 percent from 5.07 percent late Thursday.
What’s moving?
In corporate news, General Electric (down $0.43 to $32.24, Charts) reported higher quarterly earnings that met expectations. But the Dow component also forecast current-quarter results at or beneath analysts’ forecasts, and the stock sank over 3 percent.
GE was one of many Dow stocks stumbling. Dow aerospace and defense components Boeing (down $2.49 to $77.10, Charts), Honeywell (down $1.02 to $36.97, Charts) and United Technologies (down $2.24 to $59.19, Charts) all lost at least 3 percent.
In total, 25 out of 30 Dow stocks fell.
Book chain Borders Group (down $1.08 to $17.20, Charts) warned late Thursday that second-quarter and full-year earnings and sales will not meet Wall Street forecasts. Shares slumped 7 percent Friday.
On the upside, shares of Petco Animal Supplies (up $8.44 to $27.89, Charts) jumped 44 percent in unusually active Nasdaq trade after the retailer agreed to be bought by two private equity companies for around $1.7 billion in cash.
Market breadth was negative. On the New York Stock Exchange, losers topped winners four to one as 690 million shares changed hands. On the Nasdaq, decliners beat advancers three to one on volume of 750 million shares.
In global trade, Asian markets slumped after Japan raised interest rates for the first time in six years. European markets fell in late trade.
