Uneasy investors sold blue-chip stocks moderately lower Tuesday, as oil prices climbed above $51 per barrel, creating new worries that rising energy costs would curb consumer spending and corporate profits.
The major indexes did not see a major oil-based sell-off, as they have in the past, as crude futures posted a new record closing price. A barrel of light crude closed at $51.09, up $1.18, on the New York Mercantile Exchange, after reaching a new intra-day record high of $51.29. Nonetheless, rising energy prices made investors anxious enough that they decided to collect profits after the market’s substantial gains in four of the last five sessions.
“We’re now talking about higher energy prices through the winter months, and futures for December and January have moved up quite dramatically,” said Chris Wolfe, global head of equities for J.P. Morgan Private Bank. “What that suggests is that maybe this is a longer break on the economy’s growth than we’ve been anticipating.”
At Tuesday’s close, the blue-chip Dow Jones industrial average was down 38.86 points, or 0.4 percent, at 10,177.68, while the broader Standard & Poor’s 500-stock index was down 0.69 point, or 0.1 percent, at 1,134.48. After a shaky session the technology-rich Nasdaq composite index finished with a gain of 3.10 points, or 0.2 percent, at 1,955.50.
As oil prices climbed, investors were concerned that the economic “soft patch” that plagued Wall Street this summer might continue through the fourth quarter and that the market’s usual year-end rally might be muted, especially if oil prices remain in the $50 per barrel range.
“I think there’s some money that really wants to come into the market, but there’s some hesitancy out there because of these uncertainties,” said Michael Murphy, head trader at Wachovia Securities in Baltimore. “Third-quarter numbers will be coming out here starting this week, and we have the jobs figures on Friday, and that will move things along one way or the other.”
Friday’s job creation report from the Labor Department is always closely watched on Wall Street, but with recent economic data pointing to uncertainty in the economic recovery, the report will take on even more importance, analysts said.
Adding to investors’ concerns was a disappointing report from the Institute for Supply Management, which said its service sector index fell to 56.7 in September from 58.2 in August. The reading was lower than the 59 expected by Wall Street. A figure over 50 represents expansion in the service sector, but the latest number represented a slowdown in growth.
Technology stocks fell as Advanced Micro Devices Inc., Intel Corp.’s rival in computer semiconductors, warned that its revenues would be less than forecast for the third quarter. AMD slid 2 cents to $13.68, while Intel gained 19 cents to $21.32.
A pair of technology bellwethers and Dow components were affected by a J.P. Morgan Securities research note, which upgraded IBM Corp. to “overweight” from “neutral,” while downgrading Hewlett-Packard Co. to “neutral” from “overweight.” IBM gained 16 cents to $87.32, while H-P fell 8 cents to $18.98.
Eastman Kodak Co. rose 31 cents to $33.80 after it announced it will cut nearly 900 jobs at three manufacturing facilities in Europe, part of the company’s transition from film to digital photography.
Camden Property Trust slumped $1.85 to $45.05 after it said it would pay $1.9 billion in a takeover of rival Summit Properties Inc., which would create a major national network of apartment buildings. Summit was up $2.80 at $30.64 on the news.
Chiron Corp., maker of half the U.S. supply of flu vaccines, cut its profit outlook for the year after the British government pulled the company’s manufacturing license. Chiron tumbled $7.44, or 16 percent, to $37.98 on the news.
Overseas, Japan’s Nikkei stock average was flat. In Europe, Britain’s FTSE 100 closed up 0.5 percent, France’s CAC-40 edged 0.1 percent higher for the session, and Germany’s DAX index gained 0.4 percent.