Oil prices send markets lower
A surge in oil prices sent the major stock indexes to their lowest levels of the year Friday as investors overlooked a strong earnings report and a bullish outlook from General Electric Co. All three indexes fell for the third straight week.
Frigid weather in the Northeast and concerns over possible OPEC production cuts pushed crude futures substantially higher. A barrel of light crude settled at $48.53, up $1.22, on the New York Mercantile Exchange.
Even an 18 percent jump in earnings at General Electric — a market bellwether due to the conglomerate’s varied holdings — failed to hold investors’ attention for long, highlighting the deep concerns on Wall Street since the three-week selloff began at the start of the year. Oil prices, a weak dollar, concern over interest rates and the upcoming Iraqi election have all been cited as potential problems that have kept investors on the sidelines.
“I think you’re seeing people reacting to things, rather than anticipating things. There’s a lot of caution out there,” said Paul McManus, chief investment strategist at Independence Investments. “I think people are sitting around, waiting for earnings to get past us, before making any kind of moves.”
The Dow Jones industrial average fell 78.48, or 0.75 percent, to 10,392.99.
Broader stock indicators also fell. The Standard & Poor’s 500 index was down 7.54, or 0.64 percent, at 1,167.87, and the Nasdaq composite index dropped down 11.61, or 0.57 percent, to 2,034.27.
The last time the major indexes sustained losses for this long was a four-week stretch in late June through late July. The Dow and S&P haven’t started January with three down weeks since 1977. Profit-taking, concerns over inflation, and some high-profile earnings disappointments — despite a strong overall earnings season — all contributed to the slump.
For the week, the Dow fell 1.56 percent, the S&P was down 1.41 percent, and the Nasdaq dropped 2.57 percent.
Analysts said the week ahead could feature more of the same, with worries about the Iraqi elections, production cuts from OPEC after its Jan. 30 meeting, and the upcoming Federal Reserve meeting on Feb. 1-2 adding to the mix of uncertainty.
Consumer confidence fell slightly in January, according to a preliminary reading of the University of Michigan’s consumer sentiment index. The index fell to 95.8, down from December’s 97.1 reading and less than the 97.5 Wall Street had expected.
Declining issues barely outnumbered advancers on the New York Stock Exchange, where preliminary consolidated volume came to 2.04 billion shares, compared with 2.11 billion on Thursday.
The Russell 2000 index of smaller companies was down 1.26, or 0.21 percent, at 611.08.
Overseas, Japan’s Nikkei stock average fell 0.41 percent. In Europe, Britain’s FTSE 100 was virtually unchanged, France’s CAC-40 rose 0.31 percent for the session, and Germany’s DAX index lost 0.16 percent.