NEW YORK (AP) - Stocks traded mixed Monday after another spike in oil prices
and a decline in regional manufacturing activity touched off concerns about the
ability of the economy to push ahead.
A declining dollar helped drive the price of a barrel oil to a record near
$140 and, at the same time, retail gas prices etched a new high of $4.08 a
gallon.
Treasury prices were little changed after falling sharply last week amid
worries that inflation would erode returns.
While sectors like financials, materials and technology showed strength
Monday, worrisome economic news appeared to weigh on parts of the market. The
New York Federal Reserve Bank's Empire State index indicated that manufacturing
activity in New York State continued to weaken in June. The index fell to a
negative 8.7 from a negative 3.7 a month earlier. The report is the earliest of
several monthly regional snapshots that investors look to for insights on
economic activity.
The increase in energy prices appeared to fan worries that rising prices in
an already uncertain economy will cause consumers to tamp down spending. A
pullback could deal a blow to the economy, as consumer spending accounts for
more than two-thirds of U.S. economic activity.
"A lot of people are very worried about the economy," said Thomas Nyheim
portfolio manager at Christiana Bank & Trust Co. "Oil prices are where they are
starting to hit the consumer."
He contends that investors will continue to look for safe investments and
that the stock market's fortunes will remain tethered to oil prices in the
coming months as investors search for clues about the well-being of the economy.
In late morning trading, the Dow Jones industrial average fell 45.92, or
0.37 percent, to 12,261.43.
Broader stock indicators were mixed after trading lower in the early going.
The Standard & Poor's 500 index fell 2.05, or 0.15 percent, to 1,357.98. The
Nasdaq composite index, which contains many technology names, rose 11.68, or
0.48 percent, to 2,466.18.
Advancing issues outnumbered decliners by about 4 to 3 on the New York Stock
Exchange, where volume came to 412.2 million shares.
The moves follow a strong session Friday that left the Dow with a weekly
advance and pared the declines seen by the S&P 500 and Nasdaq composite index
for the week.
The yield on the benchmark 10-year Treasury note, which moves opposite its
price, was flat at 4.26 percent on Monday. The dollar was mixed against other
major currencies, while gold prices rose.
Oil prices jumped as the dollar fell, while investors seemed largely
unswayed by Saudi Arabia's plans to boost production. Light, sweet crude set a
trading record of $139.89 a barrel on the New York Mercantile Exchange, but
later were up $2.40 at $137.26.
Stocks of financial companies rose after Lehman Brothers Holdings Inc.
offered investors some relief by not reporting results that were worse than
feared. The company reported a second-quarter loss of $2.87 billion, or $5.14
per share. The figures were unchanged from what the nation's No. 4 investment
bank projected a week ago. The loss, the first for Lehman since it went public
in 1994, follows misplaced hedges and trading positions. Lehman rose $1.58, or
6.2 percent, to $27.39.
Investors were reviewing a decision by insurer American International Group
Inc. to name former Citigroup Inc. executive Robert Willumstad as chief
executive. Willumstad replaces Martin Sullivan after AIG logged billions in
losses on bad bets in the mortgage market. AIG, one of the 30 stocks that
comprise the Dow industrials, fell 42 cents to $33.76.
The Russell 2000 index of smaller companies fell 0.02, or less than 0.01
percent, to 733.59.
Overseas, Japan's Nikkei stock average rose 2.72 percent. In morning
trading, Britain's FTSE 100 declined 0.40 percent, Germany's DAX index fell 0.98
percent, and France's CAC-40 fell 0.82 percent.
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