Published February 24, 2011
FOX Business: The Power to Prosper
The blue chips pared triple-digit losses late Thursday as oil prices that had initially surged to over $103 a barrel plummeted to under $96, easing fears high energy prices will crimp the global economic recovery.
The Dow Jones Industrial Average fell 37.28 points, or 0.31% to 12068.50, the S&P 500 was down by 1.30 points, or 0.10% to 1306.10 and the Nasdaq Composite was up 14.91 points, or 0.55%, to 2737.90 after briefly slipping into negative territory. The FOX 50 fell 2.50 points, or 0.27%, to 928.
Crude oil, which had hit the $103.41 mark amid concerns that political turmoil in Libya would spread to other oil-producing countries, fell deep into the red, helping the Dow bounce back from triple-digit losses at session lows.
Despite the downward momentum, certain shares like chip-maker Advanced Micro Devices (AMD) and retailer Target (TGT) were able to buck the trend and move significantly higher on the day. Dow components Travelers (NYSE: TRV) and Wal-Mart (WMT) didn't fare as well, falling over 1.5%.
A slew of commentary and rumors on the tumultuous situation in the Middle East pushed oil prices down.
“I don’t think people have abandoned their bullish thesis, the uptrend is still intact,” said Michael James, managing director of equity trading at Wedbush Securities. “Dips are buying opportunities. “
The bumpy day for stocks comes after the blue chips fell nearly 300 points in the prior two days on fears surging crude oil prices can affect the global economic recovery.
Other analysts disagree with James' estimate, saying the political turmoil in the Middle East could spread to other oil-rich nations -- putting significant pressure on worldwide oil production."The market cannot accommodate another disruption," Goldman Sachs analyst Jeffrey Currie wrote in a research note.
A statement by Treasury Secretary Timothy Geithner saying world economies have ample amounts of oil reserves to fare a crisis, coupled with a rumor that Libyan leader Muammar al-Qaddafi has been shot to death, aided in the collapse of Thursday's oil run.
"We’re nowhere near a tight supply-and-demand situation" in the U.S. oil markets, according to Darin Newsom, senior commodities analyst at DTN.
Oil settled lower by 82-cents to $97.28 a barrel, and fell below $96 in electronic trading.
On the economic front, The Labor Department said weekly claims for unemployment dropped by 22,000 last week to a seasonally adjusted 391,000. The four-week moving average, which many economists see as a less volatile figure, fell to 402,000 -- the lowest level since July 2008. The forecast called for a drop of about 5,000 claims.
Trends in jobless claims data are generally seen by market participants as an indicator of the health of the labor market, an important factor in economic wellbeing.
However, durable goods orders, seen as an important indicator of the strength of the manufacturing sector, fell by 3.6% in January, excluding transportation -- the biggest drop since January 2009.
Analysts were expecting durable goods orders to jump 3% in January, after a surprising drop of 2.3% in December.
Fresh data on sales of new homes also spawned fears about the a recovery in the housing market. The Commerce Department said sales of new homes fell 12.6% to 284,000 in January, after jumping 15.7% in December. Economists were expecting sales to hit the 310,000 mark.
The number of new homes for sale also slipped by 1,000 units to 188,000 -- the lowest level since December 1967.
In currency markets, the U.S. dollar sagged to a three-week low against the euro. The dollar was down broadly against a several world currencies, with the Dollar Index falling 0.31%.
General Motors (GM) revealed its fourth straight quarterly profit and posted sales of $36.9 billion that handily beat estimates for $33 billion. The quarter capped off its first annual profit since 2004.
Advanced Micro Devices' (AMD) graphics technology will replace NVIDIA (NVDA) in Apple's (AAPL) refreshed MacBook Pro line. AMD was up over 5% at session highs and is one of Thursday's top performers on the broad S&P 500.
Sears (SHLD) beat the Street with EPS of $3.67 on sales of $13.14 billion. The retailer and parent of Kmart also tapped long-time technology executive Lou D'Ambrosio as its new CEO, taking over for interim CEO W. Bruce Johnson.
Procter & Gamble (PG) said it would have to increase prices as the consumer products maker's exposure to commodities has jumped 10% since its last earnings statement.
Priceline (PCLN) shares jumped nearly 9% after the online travel agency reported its fourth-quarter profit jumped 73%. The company also said it expects its first-quarter profit to increase to between $2.34 to $2.44 a share, easily beating analysts' expectations of $2.30 a share.
Bank of America (BAC) was one of the Dow's worst performers, sinking nearly 2%, after investors filed a lawsuit demanding the nation's largest bank buy back $1.06 billion in loans.
Newmont Mining (NEM) posted a 46% rise in fourth-quarter profits and revealed a non-GAAP profit of $1.16 a share exceeded estimates by 2 pennies. The miner's revenue inched up 1.2% to $2.55 billion.
Dish Network's (DISH) fourth-quarter profits jumped 41% to 56 cents a share, compared with forecasts for 53 cents. Sales increased 8.2% to $3.21 billion, matching estimates. Dish lost about 156,000 net subscribers last quarter.
The U.K.'s FTSE 100 fell 0.06% to 5919, Germany's DAX slumped 0.89% to 7130 and France's CAC 40 was lower by 0.09% to 4009.
In Asia, Japan's Nikkei 225 lost 1.19% to 10452.70, Hong Kong's Hang Seng sold off 1.34% to 22601 and China's Shanghai Composite advanced 0.56% to 2878.60.