Stocks Tumble in Late Afternoon Trading
Friday, July 14, 2006; 3:15 PM
NEW YORK -- Surging oil prices pulled stocks sharply lower for a third straight session Friday, with bland earnings at General Electric Co. and weak consumer data further dampening the economic outlook. The Dow Jones industrial average has lost almost 400 points over the past three days.
"I don't think you're going to bring out a lot of buyers in the market after a week like this," Jay Suskind, head trader at Ryan Beck & Co., said of escalating political turmoil in the Middle East, Iran and North Korea. "Uncertainty over the world situation is just too much for the market to have a solid up day."
Crude futures reached an intraday record of $78.40 a barrel as Israel intensified its attacks on Lebanon, raising concerns about potential supply disruptions throughout the Middle East. A barrel of light crude was up 30 cents at $77 on the New York Mercantile Exchange.
Retail sales fell unexpectedly in June, as did consumer confidence for July. Industrial and financial conglomerate GE said its second-quarter earnings matched analyst estimates, but the in-line results troubled investors already concerned that the recent spate of profit warnings was a sign the economy could be headed for a downturn.
In late afternoon trading, the Dow tumbled 106.86, or 0.99 percent, to 10,739.43. The blue-chip index fell more than 121 points Wednesday and lost almost 167 points Thursday.
Broader stock indicators also fell. The Standard & Poor's 500 index dropped 6.71, or 0.54 percent, to 1,235.58, and the Nasdaq composite index declined 14.09, or 0.69 percent, to 2,040.02.
Declining issues outnumbered advancers by about 3 to 1 on the New York Stock Exchange.
Wall Street has slogged through a gauntlet of mounting uncertainties in recent weeks, with concerns about a potential slowdown in the global economy now exacerbated by increasing political turmoil in all corners of the globe.
Much of the market's worries stemmed from the trend of rising interest rates worldwide, which is expected to curtail spending and foreign investment and drag on economic growth. Although the recent jump in oil prices have reinforced beliefs that the Federal Reserve will boost rates again at its Aug. 8 meeting, the early wave of downbeat earnings data has spurred fears that the economy is weakening and could buckle beneath higher lending costs.
"I think (second-quarter earnings) will come in slightly above expectations, but that still doesn't answer the question of whether the economy is slowing and what companies are at risk," said Steven Goldman, chief market strategist at Weeden & Co. "The nervousness will not change over the next couple of months."
Traders appeared to see bonds as less risky investments and sent prices higher, with the yield on the 10-year Treasury note slipping to 5.06 percent from 5.07 percent late Thursday. The 2-year yield, however, stood at 5.09 percent; the inversion of bond yields signaled expectations for slowing economic growth.
The U.S. dollar gained on the Japanese yen and was flat versus European currencies. Gold prices advanced, climbing to almost $670 an ounce.