Stocks slide on oil, Toll Brothers
Stocks extended their losses into a second day Thursday after a cautious outlook from home builder Toll Brothers Inc. and a surge in energy prices rattled investors.
The market was pleased with revised forecasts from chipmakers Texas Instruments Inc. and Xilinx Inc., signals that tech spending remains healthy. But anxious traders brushed aside the news and waited for Intel Corp.’s mid-quarter update after the closing bell.
Without much news to guide trading, Wall Street drifted this week following a November rally that vaulted stocks to four-year highs. Recent signs that the economy is faring better than expected renewed fears about inflation and rising interest rates, although some traders still anticipate a final runup in stocks by year-end.
“The dynamics of (this week’s) decline have been orderly and nothing to be concerned with,” said Steven Goldman, chief market strategist at Weeden & Co. “The market … cleansed some of its excesses on that pullback.”
Goldman said the main concern on Wall Street continues to be whether the Federal Reserve will extend its string of rate hikes now that the economy appears to be doing well. Higher rates could lead to a consumer slowdown as lending costs increase, he said.
The Dow Jones industrial average fell 55.79, or 0.52 percent, to 10,755.12.
Broader stock indicators were also lower. The Standard & Poor’s 500 index fell 1.53, or 0.12 percent, to 1,255.84, and the Nasdaq composite index fell 5.55, or 0.25 percent, to 2,246.46.
Colder weather in the Northeast and Midwest drove expectations for greater heating fuel demand, although weekly inventory reports have indicated that U.S. oil and gas reserves continue to expand. On the New York Mercantile Exchange, natural gas surged $1.29 to $14.99 per 1,000 cubic feet, as a barrel of light crude jumped $1.45 to $60.66.
Bond prices reversed Wednesday’s decline, with the yield on the 10-year Treasury note tumbling to 4.46 percent from 4.52 percent late Wednesday. The dollar was mixed against other major currencies in European trading, while gold prices lingered near record highs.
Toll Brothers posted a 72 percent jump in fourth-quarter profit as revenue climbed 40 percent. But investors remained optimistic about the stock itself although the homebuilder gave a disappointing forecast. Toll Brothers gained $1.25 to $35.55.
Declining issues outpaced advancers by 18 to 15 on the New York Stock Exchange, where volume of 1.67 billion shares topped the 1.59 billion shares changing hands at the same point Wednesday.
The Russell 2000 index of smaller companies rose 2.21, or 0.32 percent, to 685.22.
Overseas, Japan’s Nikkei stock average declined 1.95 percent. Britain’s FTSE 100 rose 0.04 percent, Germany’s DAX index gained 0.38 percent, and France’s CAC-40 was higher by 0.20 percent.