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Stocks dip below 10000 mid october { October 13 2004 } Original Source Link: (May no longer be active)
http://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2004/10/13/financial1436EDT0153.DTLhttp://www.sfgate.com/cgi-bin/article.cgi?f=/news/archive/2004/10/13/financial1436EDT0153.DTL
Oil rally sends stocks plunging
- MEG RICHARDS, AP Business Writer
Wednesday, October 13, 2004
(10-13) 11:36 PDT NEW YORK (AP) --
Soaring oil prices trumped positive earnings news on Wall Street Wednesday, and stocks plunged as investors rushed to take profits on new fears that the market is in the midst of a commodity bubble.
Early in the session, the market was cheered by stronger than expected profits at chip bellwether Intel Corp., as well as an upbeat outlook from McDonald's Corp. But with oil traders nervously handicapping weekly inventory numbers due Thursday, rising crude prices quashed earlier gains.
After a day of oil declines and a sharply higher open for stocks, the market's weakness surprised analysts. Anticipation of weekly jobless claims, following a disappointing employment report for September, was also spooking buyers.
"There is so much uncertainty in the market right now, and it is playing itself out as fear: The fear of being overcommitted to stocks," said Ken Tower, chief market strategist for Schwab's CyberTrader. "We've also seen a lot of recent sentiment data that suggests there is a real short-term consensus opinion that the market headed lower. So there's tremendous uncertainty, and uncertainty and anxiety are the enemies of a bull market."
In afternoon trading, the Dow Jones industrial average sank 93.73, or 0.9 percent, to 9,983.45.
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 9.73, or 0.9 percent, at 1,112.11. The Nasdaq composite index was down 5.95, or 0.3 percent, at 1,919.22, propped up somewhat by strength in the semiconductor industry.
Crude oil futures opened lower, a day after trading above $54 per barrel, raising hopes for a better economic picture by year's end. But as oil traders became less bullish about U.S. inventories and worries grew about Hurricane Ivan's lingering impact on production in the Gulf of Mexico, price began to soar. Light, sweet crude for November delivery surged $1.19 to $53.70 per barrel on the New York Mercantile Exchange.
The rise in oil prices overshadowed upbeat earnings news from Intel, which buoyed tech stocks, and McDonald's, which boosted its third-quarter earnings outlook, far outstripping analysts' forecasts. Although third-quarter earnings have been fairly positive so far, analysts are dubious about whether that will be enough to lift stocks in the face of lofty energy prices.
Intel surged 69 cents to $20.97 after beating Wall Street forecasts by 3 cents per share, although analysts' estimates were reduced after a disappointing mid-quarter update from the semiconductor maker. Other chip stocks also gained, with Advanced Micro Devices Inc. climbing 14 cents to $13.84 and National Semiconductor Corp. rising 47 cents to $15.70.
McDonald's was up $1.14 at $28.69 after it projected earnings of 61 cents per share in the third quarter, crediting a stronger tax situation and better worldwide sales for its upgraded outlook. Analysts had been expecting earnings of 49 cents per share.
Yahoo! Inc. gained 70 cents to $34.93 after quadrupling its profits from a year ago. The company's earnings of 9 cents per share was in line with Wall Street expectations.
Declining issues outnumbered advancers by nearly 2 to 1 on the New York Stock Exchange. Volume came to 1.02 billion shares, compared to 818.86 million shares traded Tuesday.
The Russell 2000 index of smaller companies was down 7.47, or 1.3 percent, at 569.24.
Overseas, Japan's Nikkei stock average fell 0.1 percent. In Europe, Britain's FTSE 100 declined 0.28 percent, France's CAC-40 added 0.15 and Germany's DAX index was up 0.24 in late-day trading.
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