Stocks slumped in listless trading Monday, with the market’s major indices closing at their lowest levels so far this year, amid concerns about the upcoming election in Iraq and rising crude oil prices.
Market watchers are growing increasingly concerned about the slide in stocks throughout January, which some analysts blamed on Wall Street’s strong fourth quarter performance. A car bomb attack in Baghdad, targeting the prime minister’s party headquarters, did little to ease the anxiety of investors ahead of Iraq’s Jan. 30 election. Oil prices sank early in the day, but settled up 28 cents at $48.81 per barrel on the New York Mercantile Exchange.
“In general, the market is waiting for the elections in Iraq,” said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. “And oil prices have been on the move up for the past week.”
The Dow Jones industrial average seesawed through much of Monday, closing with a loss of 24.38 points, or 0.2 percent, while the broader Standard & Poor’s 500-stock index was down 4.12 points, or 0.4 percent. The Nasdaq composite index, full of technology stocks, fell 25.57 points, or 1.3 percent.
Investors will be hard pressed to dodge the curse of January in 2005, with the U.S. stock market’s anemic performance in the first three weeks of the month likely to set the tone for the rest of the year, technical analysts said Monday.
A down January has predicted a down year for stocks 10 out of 17 times, according to Standard & Poor’s data. And with just six trading sessions left in the month, including Monday, the tally could as well be 11 out of 18 times after 2005.
Last week was the first time since 1982 — the year that the ’80s bull market started — that the Dow industrials and the Nasdaq composite fell for the first three weeks of a year.
Investors in the Nasdaq composite, which is down 7.7 percent year-to-date, may have been unsettled when chip-making giant Infineon Technologies AG warned that second-quarter earnings could slow. The Munich, Germany-based company reported that first-quarter net profits quadrupled thanks to one-time license income.
The Infineon report “is probably part” of the Nasdaq’s malaise, said John Caldwell, chief investment strategist for McDonald Financial Group, part of Cleveland-based KeyCorp. But, he added, the telecommunications sector has also been a problem, with Motorola coming in last week with a cautious outlook and Nokia earnings still awaited.
Overall, Caldwell said, “Today strikes me as one of those days there’s a lot of activity but not much progress.”
Investors also continued to eye quarterly earnings results. This week’s calendar of releases includes 10 of the 30 Dow industrials, along with more than 150 other major companies.
Among Monday’s gainers, Dow component American Express Co. rose 67 cents to $52.60 after reporting fourth-quarter earnings of $896 million, or 71 cents a share — a penny ahead of analysts’ estimates. The financial services company’s earnings surged 17 percent, thanks to record card-member spending, higher average card-member lending balances and strong travel sales.
Microsoft Corp., another Dow component, gained 2 cents to $25.67 after the Redmond, Wash., software company announced in Belgium that it will not appeal an interim European Union ruling forcing it to strip Media Player from its Windows platform.
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Procter & Gamble Co. fell 44 cents to $55.21 after UBS downgraded the stock to “neutral” from “buy” on its recent price rise.
Polo Ralph Lauren Corp. also dropped, shedding 2.7 percent, or $1.08, to $39.03, after Merrill Lynch downgraded it to a “neutral” from a “buy.”
Wendy’s International Inc. lost 42 cents to $37.33 after CIBC World Markets downgraded the fast-food company to “sector perform” from “sector outperform.” CIBC’s upgrade of McDonald’s Corp. sent its shares up 49 cents to $31.74. CIBC said Wendy’s faces a more difficult competitive environment in 2005, including greater competition from McDonald’s in premium products.
Overseas, Japan’s Nikkei stock average rose 0.45 percent. Britain’s FTSE 100 advanced 0.19 percent, Germany’s DAX index was off 0.28 percent, and France’s CAC-40 fell 0.14 percent.