Stocks fall on surge in crude oil prices
Stocks declined Friday, erasing almost half of the biggest daily gain in three months, amid investor concern that the surge in crude oil prices will curtail U.S. economic expansion.
The Standard & Poor's 500-stock index slumped 0.7 percent to 1,321.15 after climbing 1.7 percent Thursday. The gauge added 0.1 percent this week.
The Dow Jones industrial average decreased 88.32 points, or 0.7 percent, to 12,169.88.
Crude oil rose 2.5 percent to a 29-month high, closing at $104.42 a barrel in New York, as Libyan rebels repelled government attempts to retake oil hubs. There was also concern that unrest in Libya will spread to other oil producers in the region, curbing exports.
"It's all about oil," said Quincy Krosby, chief market strategist for Newark-based Prudential Financial. "Investors are really concerned about more geopolitical disruption over the weekend. If oil continues above $100 a barrel, it will certainly have a negative impact on businesses and consumer spending."
"We've had a V-shaped recovery, but it's a slower move coming off the bottom," said Liz Ann Sonders, the New York-based chief investment strategist at Charles Schwab. "We've gotten to sentiment extremes, and that increases the market vulnerability, and that's exactly what we saw with the unrest in the Middle East."
Stocks fell even after a report showed that orders at U.S. factories climbed in January by the most in more than four years, as demand for commercial aircraft rebounded after slumping the previous month. Bookings for manufacturers' goods increased 3.1 percent, the most since September 2006, after a revised 1.4 percent gain in December that was larger than previously estimated, the Commerce Department said.
Shares of industrial companies in the S&P 500 slumped 1.2 percent as a group. Caterpillar, the world's largest maker of construction equipment, dropped 1.2 percent to $103.04. GE slid 1.8 percent to $20.37. The Morgan Stanley Cyclical Index fell 1.1 percent as 26 of its 30 stocks retreated. The Bloomberg U.S. Airlines Index fell 1.9 percent.
Financial stocks had the biggest decline in the S&P 500 among 10 industries, dropping 1.3 percent. The KBW Bank Index slumped 1.5 percent as 22 of its 24 stocks retreated.
Citigroup dropped 3 percent to $4.54. The third-largest U.S. bank was cut to "neutral" from "buy" by Bank of America, which also cut Goldman Sachs Group to "neutral" from "buy." Goldman Sachs shares fell 2.1 percent to $161.
Marvell Technology fell 11.5 percent to $16.13. The maker of the processor that runs BlackBerry smartphones announced fourth-quarter earnings and revenue that missed estimates.
Monster Worldwide slipped 6.4 percent, the most in the S&P 500, to $15.90. The online-recruiting company was cut to "market perform" from "outperform" at William Blair.
Agilent Technologies rose 9.2 percent, the most in the S&P 500, to $46.75. The world's biggest maker of scientific-testing equipment increased its long-term sales and operating margin forecasts at a meeting with analysts Thursday, J.P. Morgan Chase said in a note to clients. JDS Uniphase, which bought Agilent's network solutions test unit last year, climbed 8.9 percent to $27.37.
Cadence Pharmaceuticals soared 14.8 percent to $8.62. The biopharmaceutical company reported a loss of 33 cents a share in the fourth quarter, 1 cent less than the average analyst estimate in a Bloomberg survey.
- Bloomberg News