Wall Street ended an erratic session moderately lower today as concerns grew about the impact of high fuel costs on consumers and corporate profits.
Money & Markets
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The Conference Board said its June consumer confidence index came in at 50.4, far below economists’ expectation of 56.5 and May’s reading of 58.1. The disappointing news arrived after shipper UPS Inc. warned late Monday that high oil prices are dampening its profits, and after a dismal reading on U.S. home prices.
Oil prices rose 26 cents to settle at $137.00 a barrel on the New York Mercantile Exchange, adding to investors’ anxiety.
Wall Street’s overriding concern is that expensive energy will prevent the economy from growing and aggravate inflation at the same time. Given the anemic economy — not to mention the additional debt losses expected at the nation’s biggest banks — the Federal Reserve has little wiggle room to combat inflation with higher interest rates. Policymakers, whose rate-setting meeting began Tuesday and concludes Wednesday, are anticipated to hold the key rate at 2 percent.
“The market has priced in no action from the Fed,” said Jim Herrick, manager of equity trading at Baird & Co. “With the housing market the way it is, and the financial system feeling fragile … I’d really be surprised if the Fed in this environment would consider raising rates in the near future.”
Financial services stocks were among the top performers. With companies including Merrill Lynch & Co. and Bank of America Corp. at multi-year lows, many traders saw a good opportunity to buy, or at least unwind their bets that the stocks would drop further.
According to preliminary calculations, the Dow Jones industrial average fell 34.93, or 0.29 percent, to 11,807.43, after falling more than 100 points in earlier trading and later moving in and out of positive territory. The Dow dropped as low as 11,725.52 — beneath the levels it sank to in March when Bear Stearns Cos. appeared to be on the verge of collapse.
Broader stock indicators also fell. The Standard & Poor’s 500 index declined 3.71, or 0.28 percent, to 1,314.29, and the Nasdaq composite index fell 17.46, or 0.73 percent, to 2,368.28.
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