Safety Keeps Markets Even

Stock traders played it safe today, barely moving the Dow Jones industrial average and the Standard & Poor's 500 stock index, but letting takeover talk nudge the Nasdaq Stock Market composite index higher.

The S&P closed off less than a point at 1240.56. The Dow inched up four points to 10,682.94. The Nasdaq climbed seven points to 2,182.83.

Energy prices continued to fall, but Wall Street now realizes that is not necessarily good news. Down for the fifth time in six days, crude oil futures fell 68 cents a barrel to $63.40 and the wholesale price of gasoline dropped almost 9 cents a gallon.

If prices were falling simply because the supply is growing--thanks to the release of oil from the strategic reserve and the restarting of refineries--the trend would be considered a plus for the economy and the stock market.

But prices are also being brought down by weakening demand, which has traders and economists worried.

Between the direct damage to the nation's economy done by Hurricane Katrina and the indirect hit caused by record petroleum prices, growth looks like it will be weaker than previously projected. This is not good for the market.

The latest projections are that the economy's growth rate will drop by a full percentage point--from somewhere around 4 percent to somewhere around 3 percent, depending on which economists you're listening to.

Today, the chairman of Toyota warned that soaring gas prices in the United States and Asia are going to hurt his company's sales worldwide this year. Since Toyota makes more hybrid cars than anyone else and lots of other fuel-sippers as well, what's bad for Toyota is bad for General Motors, Ford and everyone else who makes gashogs.