Middle-east Arab News Opinion | Asharq Al-awsat

Stocks Tumble on Rising Oil, Weak Dollar - ASHARQ AL-AWSAT English Archive
Select Page

NEW YORK, AP – Stocks plunged Tuesday as a jump in oil prices and sliding consumer confidence compounded worries about a weak May sales report from Wal-Mart Stores Inc. The Dow Jones industrial average skidded 110 points.

The selling followed three straight days of gains last week, when mild economic data calmed inflation fears and temporarily halted a steep two-week slide. Investors have been wary of the possibility for more rate hikes; this week’s key figures on labor costs and wages are expected to provide some guidance on the Federal Reserve’s plan.

But Ken Tower, chief market strategist for Schwab’s CyberTrader, questioned the nature of last week’s buying as short sellers covering their positions ahead of the Memorial Day weekend. “Last week, there were many signs of short-term investor pessimism,” Tower said.

However, “(Tuesday’s) pullback is not what you would’ve wished for, but it’s still in the context of a recovering market,” he said. “If we’re in an ongoing rally phase, this is where we ought to bottom out and see the market move higher.”

Although May consumer confidence fell less than expected, investors remained worried about soaring energy costs hindering spending. Wal-Mart said its sales came in at the low end of estimates, blaming the continued impact of high gasoline and utility prices on its customers.

Elsewhere, a broker’s downgrade of General Motors Corp. added further pressure on the Dow, as more declines for the U.S. dollar and a languishing bond market also weighed on Wall Street’s mood.

In midday trading, the Dow slumped 110.46, or 0.98 percent, to 11,168.15. The Dow added 180 points in last week’s runup.

Broader stock indicators also retreated. The Standard & Poor’s 500 index was down 12.22, or 0.95 percent, at 1,267.94, and the Nasdaq composite index plunged 28.48, or 1.29 percent, to 2,181.89.

Bonds slipped, with the yield on the 10-year Treasury note edging up to 5.08 percent from 5.05 percent late Friday. The U.S. extended its slide against the Japanese yen, and gold prices lingered near $665 an ounce.

Crude futures rose amid expectations of greater fuel demand during the summer driving season, and as forecasters warn of hurricane activity in the coming months. A barrel of light crude jumped 98 cents to $72.35 on the New York Mercantile Exchange.

The Conference Board said its May consumer confidence index slid 6.6 points to 103.2, which topped economists’ prediction for a reading of 100.9.

In corporate news, Wal-Mart said May same-store sales grew 2.3 percent, at the low end of forecasts. Wal-Mart dropped $1.22 to $48.43.

Deutsche Bank cut GM to “sell” on concerns about valuation and moderating vehicle sales. GM sank $1.22 to $26.86.

Kinder Morgan Inc. said its chairman and chief executive officer is leading a $13.4 billion bid to take the pipeline operator private for $100 per share. Kinder Morgan surged $16.46 to $100.87.

Albertsons Inc. posted a higher first-quarter profit that handily topped Wall Street estimates, although its revenue was flat and missed targets. Albertsons slid 3 cents to $25.59.

Declining issues outpaced advancers by almost 3 to 1 on the New York Stock Exchange, where volume of 632.6 million shares led the 623.4 million shares changing hands at the same point Friday.

The Russell 2000 index of smaller companies declined 10.84, or 1.49 percent, to 718.71.

Overseas, Japan’s Nikkei stock average fell 0.35 percent. Britain’s FTSE 100 lost 2.4 percent, Germany’s DAX index dropped 2.3 percent and France’s CAC-40 was lower by 2.42 percent.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

More Posts

Follow Me:
FacebookGoogle PlusYouTube