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Stocks sag as oil prices steam higher Original Source Link: (May no longer be active)
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Stocks Sag As Oil Prices Steam Higher
Aug 19, 3:17 PM (ET)
By MEG RICHARDS
NEW YORK (AP) - With the much-ballyhooed initial public offering of Google Inc. (GOOG) behind them and oil chugging to a new record high, investors took a step back Thursday, sending stocks lower.
The downward trend underscored that the equity market is deeply mired in the trading doldrums characteristic of late summer, though analysts noted there are additional pressures this year. Fears that the Olympics in Athens or the upcoming Republican convention in New York might be targets of terrorism have kept an unusual number of investors on the sidelines, and oil prices aren't helping, said Janna Sampson, director of portfolio management at Oakbrook Investments.
"People are thinking there is just no good reason to take on this risk," Sampson said. "I know I've got clients who are telling me they have money but they're waiting until after these things are over. And we don't often see institutional investors holding up for events."
In afternoon trading, the Dow Jones industrial average declined 76.91, or 0.8 percent, to 10,006.24.
The broader gauges were also lower. The Nasdaq composite index fell 17.66, or 1 percent, to 1,813.71. The Standard & Poor's 500 index was down 7.65, or 0.7 percent, at 1,087.52.
Oil prices soared, up $1.48 at $48.75 on the New York Mercantile Exchange, despite assurances from Iraq that it would resume full exports from its southern terminals. Further rattling traders, a radical Iraqi cleric rejected an offer to peacefully end his militia group's two-week-old standoff with U.S. forces in the holy city of Najaf.
In economic news, the number of Americans filing new claims for unemployment benefits fell for a third consecutive week, suggesting improvements in the labor market after a rough patch earlier this summer. But analysts pointed out that the figures do not include the impact of Hurricane Charley, which will be reflected in next week's data.
Separately, a measure of future economic activity fell in July for the second consecutive month, reinforcing other data that indicates the recovery is slowing. The decline in the Conference Board's Index of Leading Economic Indicators reflects growing concerns about rising costs for energy and food, as well as worries about future economic growth.
In addition to energy prices, which have raised worries about inflation and the prospect of second-half growth, weaker forecasts from software companies have weighed heavily on the market. With many shares oversold after weeks of sluggish trading, the bounce seen during the previous four sessions could simply have been a counter rally, analysts said.
"Some of the market's bellwethers are technology issues, and they're very sensitive to the economy," said Steven Goldman, chief market strategist with Weeden & Co. in Greenwich, Conn. "If there is a shadow of doubt, investors become risk-averse. And tech stocks have a very difficult time in an uncertain environment."
Google, which set its final IPO price at $85 late Wednesday - far lower than previously forecast - began trading shortly before noon, and was up $16.04 at $101.04. Stock performance at other search engines, closely watched as Google comes to market, were mixed. Yahoo! Inc. was down 48 cents at $28.00 and Ask Jeeves Inc. (ASKJ) fell 19 cents to $25.89.
Amazon.com Inc. (AMZN) was down $1.24 at $38.12 after announcing plans to buy China's largest online retailer, Joyo.com Ltd., a deal valued at $75 million. Joyo.com, which sells books, movies, music and gifts, has an estimated 80 million customers.
Delta Air Lines shed 6 cents to $4.01, after the struggling carrier said more job cuts are ahead as it tries to avoid bankruptcy court. High wages and rising fuel costs have hurt the nation's third-largest carrier, which has faced stiff competition from low-fare airlines.
Canadian telecom equipment giant Nortel Networks Corp. (NT) added 27 cents to $3.87 after it announced plans to slash its work force by 10 percent as it struggles to recover from an accounting scandal.
Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange. Volume came to 950.94 million shares, compared to 952.84 million shares traded at the same point Wednesday
The Russell 2000 index, which tracks smaller company stocks, was down 5.02, or 0.9 percent, at 536.59.
Overseas, Japan's Nikkei stock average finished 1.2 percent higher Thursday. In Europe, France's CAC-40 added 0.1 percent, Britain's FTSE 100 rose 0.2 percent and Germany's DAX index lost 0.1 percent.
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