advertisement
Article Tools
| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.568874 |
| Euro to US Dollar | 1.377410 |
| Japanese Yen to US Dollar | 0.011146 |
| Canadian Dollar to US Dollar | 0.936593 |
Crude oil fell under $70 a barrel today for the first time since late June, offering consumers the happy prospect that the price they pay for gas at the pump may be headed lower.
But although rising crude prices often dampen enthusiasm for stocks, today the crude drop was one reason the stock market went essentially nowhere.
Crude closed at $69.47, down 2.3% from Monday, as speculators sold positions after it was clear Hurricane Dean wouldn't be hitting oil and gas production facilities off the Texas and Louisiana coasts.
Crude is down 11% for August so far. And gasoline futures are down 18.6%, closing in New York at $1.868 a gallon in New York.
Motorists have getting some benefit already -- and may get more. AAA said the national average of regular unleaded gasoline was $2.777 a gallon, up slightly from Monday but down 20 cents a gallon from a month ago. Gasoline peaked at $3.17 a gallon in mid-May.
But the drop in energy prices knocked down energy stocks -- pushing the Dow Jones industrials down about 30 points to 13,091. The Standard & Poor's 500 Index was 1.5 points higher at 1,447.
The Nasdaq Composite Index, meanwhile, was up 12.7 points to 2,521, thanks in part to a 4.4% gain to $127.57 in shares of Apple (AAPL, news, msgs). Apple may sell more than 800,000 iPhones this quarter, beating the company's goal of 730,000, as consumer demand for the device stays strong, UBS analyst Benjamin Reitzes said today. An important change has come over the markets -- at least for now. They're behaving like August markets with low volume and relatively modest changes.
Volume on the New York Stock Exchange was 1.35 billion shares. On Nasdaq, it was about 1.7 billion shares. Both are substantially lower than a week ago and lower than their averages on the year.
Wall Street hates the housing business
Investors today continued to reward companies that can distance themselves from direct involvement in housing. As for those that can't -- well, tough luck for them.Capital One Financial (COF, news, msgs) said late Monday that it is shutting down its GreenPoint Mortgage unit and getting out of the business of originating mortgages. About 1,900 people will lose their jobs, and the company will take a charge of $860 million. Result: The stock was up 2.6% today to $68.47.
A Wall Street Journal article today said that speculators believe that investing legend Warren Buffett might want to buy Countrywide Financial (CFC, news, msgs) for its debt-servicing business and portfolio of mortgage securities. (Buffett reportedly wouldn't be interested in Countrywide's mortgage origination business.)
Buffett told CNBC today that the talk was purely speculation, although he has said before that the turbulence in the mortgage market might present some opportunities. Investors must be hoping he'll take advantage: Countrywide shares were up 10% today to $21.79, the biggest gain among S&P 500 stocks.
Meanwhile, a Bank of America analyst downgraded three big home builders -- Hovnanian (HOV, news, msgs), Toll Bros. (TOL, news, msgs) and Standard Pacific (SPF, news, msgs) -- and all three stocks finished lower. Standard Pacific, however, staged a dramatic recovery. Down more than 10% about 1 p.m., the stock finished down just 1.3% at $9.71.
Big Oil takes a hit
ExxonMobil (XOM, news, msgs) was the second-worst Dow performer today, falling 1.8% to $83.02 on the drop in crude prices. And four of the 10 worst performers in the S&P 500 today were energy companies. The Amex Oil Index ($XOI.X) was down 1.2% today.Murphy Oil (MUR, news, msgs) was down 3.5% to $58.27. Valero Energy (VLO, news, msgs), the largest independent refiner, was down 1.4% to $63.11.
Airlines benefited from the lower prices, however. United Airlines parent UAL (UAUA, news, msgs) was up 5.9% to $42.84.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $69.47 | $71.12 | -$1.65 | -11.18% | 13.79% |
| Heating oil (per gallon) | $1.9520 | $1.9809 | -$0.0289 | -7.05% | 22.16% |
| Natural gas (per million BTU) | $5.8170 | $6.0400 | -$0.2230 | -6.04% | -7.65% |
| Unleaded gasoline (per gallon) | $1.8637 | $1.9365 | -$0.0728 | -12.94% | 16.33% |
Wall Street loves Capital One's move
The reason for Capital One's stock move was simple, as CNBC's Bob O'Brien noted this afternoon. Wall Street hasn't been a fan of Capital One's acquisition last year of North Fork Financial – which had owned GreenPoint Mortgage -- in part because of increasing evidence of a deepening housing slump.Capital One shares are down nearly 11% this year and 19% since early February.
During the first six months of 2007, GreenPoint was the 23rd-largest mortgage company and made $12.3 billion in loans, a 30% drop from a year ago, according to Inside Mortgage Finance, a trade publication.
In addition to the layoffs, Capital One said closing GreenPoint will cut $2.15 per share from the year's results. The company now expects 2007 earnings of $5 per share.
More from MSN Money
Foreclosures rise in July
Meanwhile, there was more fuel for the mortgage fire this morning: The number of foreclosures jumped 9% in July from June to 179,599, data firm RealtyTrac said.That number represents a 93% jump from July 2006.
Five states accounted for more than half of the foreclosure filings in the U.S. last month: California, Florida, Michigan, Ohio and Georgia. Overall, 43 states reported a higher number of foreclosures this July than a year ago.
"A few states actually reported declining foreclosure activity on a year-over-year basis," CEO James Saccicio said in a press release, citing Utah, Oklahoma and Rhode Island. "Some of these states could be benefiting from increased interest from real-estate investors who have pulled out of more volatile markets where home-price appreciation seems to have hit its peak for the time being."
Detroit was the city with the highest foreclosure rate, rising 70% from June to July.
Credit worries remain a concern
While energy prices and housing news were commanding a lot of attention on Wall Street, in Washington the focus was on the ongoing credit crunch, with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Hank Paulson meeting with Senate Banking Committee Chairman Chris Dodd, D-Conn.Dodd said afterward he understood Bernanke to say the central bank will use all its tools to keep the credit markets functioning. And he said that Bernanke understood the risks to the economy if a flood of homeowners lose homes if they can't support adjustable-rate mortgages.
At the same time, however, another Fed official -- this time the president of the Federal Reserve Bank of Richmond -- suggested the Fed is going to play a modest role in the cleaning up of major financial problems.
The Fed isn't supposed to cut rates simply because of market turmoil, Jeffrey Lacker told a business group in Charlotte, N.C.
While many analysts praised the Fed's move last week to cut the discount rate, they also expressed the wish that the central bank would anticipate problems like the credit crunch before they blow up into global crises.
The Treasury market stabilized today, with the yield on the 13-week Treasury bill rising to 3.4% from 2.95% Monday. Yesterday, the yield had its biggest drop since the 1987 stock market crash, as investors acted to choose safety before anything else.
Target's profit rises
Discount retailer Target (TGT, news, msgs) reported second-quarter earnings of $686 million, or 80 cents per share. That's a 13% increase from the $609 million, or 70 cents per share, the company earned in the same quarter last year.Revenue rose nearly 10% to $14.6 billion. Earnings were in line with analysts' expectations.
"Retail stocks always overshoot to the upside and the downside," analyst Jeff Klinfelter at Piper Jaffrey said on CNBC this morning. "Target is very well-positioned because they have a demographic group that is probably a little less susceptible" to the housing, credit and energy issues.
Target shares rose 1.7% to $60.10 today. Shares of the company were up 4% for the year as of Monday's close; shares of rival retailer Wal-Mart Stores (WMT, news, msgs) were down 4% for the same period.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 3.420% | 2.950% | 0.470 | -28.90% | -29.99% |
| 5-year Treasury note yield | 4.253% | 4.302% | -0.049 | -7.58% | -9.53% |
| 10-year Treasury note yield | 4.590% | 4.634% | -0.044 | -3.79% | -2.55% |
| 30-year Treasury bond yield | 4.943% | 4.970% | -0.027 | 0.43% | 2.59% |
| Currencies | |||||
| U.S. Dollar Index | 81.45 | 81.38 | 0.07 | 0.98% | -2.37% |
| British pound in dollars | $1.9829 | $1.9889 | -0.0059 | -2.06% | 1.19% |
| Dollar in British pounds | £0.5043 | £0.5028 | 0.0015 | 2.11% | -1.18% |
| Euro in dollars | 1.3470 | 1.3479 | -0.0009 | -1.39% | 2.05% |
| Dollar in euros | € 0.7424 | € 0.7419 | 0.0005 | 1.41% | -2.01% |
| Dollar in yen | ¥114.39 | ¥114.83 | -0.44 | -2.89% | -3.89% |
| Commodities | |||||
| Gold | $666.20 | $666.50 | -$0.30 | -1.93% | 4.42% |
| Copper | $3.1650 | $3.1625 | $0.002 | -13.25% | 10.24% |
| Silver | $11.6700 | $11.9000 | -$0.23 | -8.58% | -8.00% |
| Crude oil (NYMEX) (per barrel) | $69.47 | $71.12 | -$1.65 | -11.18% | 13.79% |
Sentinel accused of fraud
Sentinel Management is facing another problem.The company, which oversees cash for other investors like commodity trading firms and hedge funds, is being investigated by the Securities and Exchange Commission, according to a court filing late Monday.
The SEC's filing said Sentinel "defrauded its clients by improperly commingling, misappropriating and leveraging their securities without their knowledge."
Sentinel had filed for bankruptcy protection on Friday after sending jitters through the already anxious stock markets when it said it was halting redemptions.
By Charley Blaine and Elizabeth Strott
Rate this Article
High