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The good news for the stock market today: Crude was lower. The bad news: Retail gasoline prices were hitting new highs.
Crude dropped to $130.81 a barrel, down 1.8% from Wednesday's record close of $133.17 and its first decline after five straight gains.
The drop was probably the biggest reason the stock market enjoyed a mild rebound after two days of drubbing.
In addition, rallies in technology and financial stocks and a surprising drop in unemployment claims gave the stock market a boost.
At the close, Dow Jones industrials were up 24 points, or 0.2%, to 12,626. The Standard & Poor's 500 Index climbed 4 points, 0.3%, to 1,394, and the Nasdaq Composite Index was up 16 points, or 0.7%, to 2,465.
Gains in Microsoft (MSFT, news, msgs), Oracle (ORCL, news, msgs), Dell Inc. (DELL, news, msgs) and chip giant Intel (INTC, news, msgs) helped tech shares.
Crude's downturn was inevitable after rising as much as 17% this month. Some analysts were saying the price increase wasn't justified.
And Bloomberg News said today that much of the recent run-up occurred because traders had sold crude oil futures short, betting oil prices would fall. When prices didn't fall, they were forced to buy back their positions, which exacerbated the rally, especially on Tuesday and Wednesday.
But if crude falls back, it may take time for the declines to be felt at the gas pump. AAA's daily survey of retail prices showed the national average of unleaded gasoline at a record $3.831 a gallon, up from $3.807 on Wednesday and up 20% from a year ago.
Meanwhile, there were signals from airlines and manufacturers such as Ford Motor (F, news, msgs) that high fuel prices could cripple their businesses if they can't adjust.
"We saw a real change in the industry demand in pickups and SUV in the first two weeks of May," Ford Chief Executive Alan Mulally told CNNMoney today. "It seems to us we reached a tipping point."
Deutsche Bank economist Joseph Lavorgna told CNBC this morning that $150-a-barrel oil would be "catastrophic" for the U.S. economy.
- Top Stocks blog: Crude's big gains threaten stocks
Consumption averaged 20.3 million barrels a day in the past four weeks, down 1.3% percent from a year earlier, the Energy Department said yesterday. Prices climbed above $135 a barrel earlier today as OPEC ministers said they could do nothing to prevent higher prices because they are pumping at capacity.
While crude was higher, heating oil was up 1.6% to $3.97 a gallon in New York. Watch this price because diesel fuel is derived from heating oil, and global demand for diesel has been soaring this year especially from China and India.
Adding another layer of concern to the future of oil and gasoline prices: A report today from the National Oceanic and Atmospheric Administration said this year's Atlantic Ocean hurricane season, which starts June 1, could be more active than normal.
NOAA expects six to nine hurricanes, two to five of which could be major hurricanes. An average season has six hurricanes, two of which reach major status, the agency said.
Nineteen Dow stocks were higher today, led by Citigroup (C, news, msgs), up 3.1% to $21.72. ExxonMobil (XOM, news, msgs)and Chevron (CVX, news, msgs), the energy stocks in the blue-chip index were down 1.2% to $92.51 and 1.1% to $101.91, respectively.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $130.81 | $133.17 | -$2.36 | 15.29% | 36.29% |
| Heating oil (per gallon) | $3.9543 | $3.9084 | $0.0459 | 24.47% | 49.25% |
| Natural gas (per million BTU) | $11.6970 | $11.6400 | $0.0570 | 7.88% | 56.31% |
| Unleaded gasoline (per gallon) | $3.3297 | $3.3965 | -$0.0668 | 13.60% | 33.68% |
Ford cuts outlook
High oil prices forced American Airlines parent AMR Corp. (AMR, news, msgs) to decide to cut back its flight capacity and add more fees, including a $15 charge to check one bag.- Read more: About those Ford profits? Never mind
Today's victim was Ford Motor, whose shares fell 8.1% to $7.16 -- the worst decline among S&P 500 stocks -- after the company said its North American operations won't be profitable in 2009. The automaker blamed lower demand for its high-profit -- but low fuel-economy -- SUVs and trucks.
Stock Charts (Year)
Ford Motor
General Motors
General Motors (GM, news, msgs) shares fell 3.6% to $18.43 on the Ford news. The decline was the worst among the 30 Dow stocks today and GM's lowest close since March 17.
But Toyota (TM, news, msgs) and Honda (HMC, news, msgs) shares were moving higher, in large part because investors see their high-mileage vehicles winning more market share.
Toyota was up 0.3% to $100.48 in New York; Honda was up 1.2% to $32.37.
Yahoo postpones shareholders meeting
Late today, Yahoo (YHOO, news, msgs) said it has postponed its annual shareholder meeting to allow the Securities and Exchange Commission to clear preliminary proxy materials that were filed Thursday.The Internet company had scheduled the meeting for July 3, but last week activist investor Carl Icahn told Yahoo he planned to nominate a slate of 10 nominees for the company's board, in the wake of its failure to negotiate a buyout by Microsoft (MSFT, news, msgs). (Microsoft is the publisher of MSN Money.)
Yahoo said in an SEC filing that it now expects the meeting to be held around the end of July.
Yahoo is required to file its preliminary proxy materials with the SEC at least 10 calendar days before definitive copies are mailed to stockholders, thus prompting the delay.
Yahoo closed today at $27.53, up 0.7% from Wednesday. Microsoft was up 0.8% to $28.47.
Separately, Bill Miller, the star portfolio manager at Legg Mason Capital Management, hasn't yet decided whether to support Icahn's slate. But in a Wednesday interview, Miller, whose fund controls a 5.4% stake in Yahoo, said he wants Microsoft to reopen talks to buy Yahoo outright.
Yahoo also said director Edward Kozel resigned from the board. He will not be replaced, dropping the board's total to 9 directors.
IEA slashes oil-supply forecast
The International Energy Agency is expected to predict even tighter supplies of crude oil, The Wall Street Journal reported this morning.The energy-analysis organization is surveying 400 oil fields around the world to assess potential production levels, the paper reported. The Journal said the IEA will likely predict that companies will produce only 100 million barrels of oil a day by 2030, lower than the previous forecast of 116 million barrels a day.
More from MSN Money
The group's findings, which will be released in November, won't be complete, the paper reported, because some producer countries -- including Saudi Arabia, Iran, China and Venezuela -- are not cooperating with its analysis.
"We are optimistic in terms of resource availability, but wary about whether the investments get made in the right places and at a pace that will bring on supply to meet demand," said Guy Caruso, the U.S. Energy Department administrator, to the paper.
Oil execs attacked on Capitol Hill
Some of the biggest winners in the oil game -- the major oil companies -- were under fire on Capitol Hill on Wednesday, as they tried to explain that their record profits are not the cause of the hardships facing American consumers.- MSN's Stock Challenge: Win $15,000!
Top executives from ExxonMobil, Chevron and BP (BP, news, msgs) were on a panel of executives questioned by the Senate Judiciary Committee at a hearing on the oil spiral.
"People we represent are hurting; the companies you represent are profiting," said Sen. Patrick Leahy, D-Vermont.
The executives responded that the rise in the price of oil is due to an imbalance in worldwide supply and demand, not the actions of the big oil companies.
"We cannot change the world market," said Robert Malone, chairman and president of BP America. "Today's high prices are linked to the failure both here and abroad to increase supplies, renewables and conservation."
That view has support on Wall Street.
"You simply have a global demand that is enormous," said Chris Conefry, a trader at Madison Prop Trading in New York. "So until someone comes up with a better, more efficient idea of an energy source and can implement it, the price is going to be dictated by demand."
The few surviving oil bears argue that the increase in the price of crude is partly due to the weakness in the dollar and to large investments in oil futures contracts on the part of large pension and university endowment funds, which have looked upon commodities as a solid momentum play in an investment scene that has otherwise been pretty gloomy.
"We must work together to find a real solution," said John Lowe, an executive vice president at ConocoPhillips (COP, news, msgs) at Wednesday's hearing. "U.S. oil companies should be viewed not as scapegoats, but as assets."
A $9.5 billion energy deal?
NRG Energy (NRG, news, msgs) late Wednesday offered $9.56 billion in stock for Calpine (CPN, news, msgs), a deal that could double NRG Energy's electricity capacity.Calpine said it is evaluating the offer. Calpine emerged from bankruptcy protection just four months ago.
Shares of NRG fell 5.1% to $40.35 on the day; Calpine shares were up 8.1% to $23.
Calpine has 60 power plants that can produce up to 23,000 megawatts of electricity; NRG has 49 plants with a capacity of 24,120 megawatts.
| Thur. | Wed. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.825% | 1.810% | 0.015 | 36.19% | -41.88% |
| 5-year Treasury note yield | 3.232% | 3.085% | 0.147 | 6.56% | -6.45% |
| 10-year Treasury note yield | 3.921% | 3.822% | 0.099 | 4.31% | -2.83% |
| 30-year Treasury bond yield | 4.629% | 4.558% | 0.071 | 2.94% | 3.81% |
| Currencies | |||||
| U.S. Dollar Index | 72.400 | 72.080 | 0.320 | -0.44% | -5.60% |
| British pound in dollars | $1.9814 | $1.9728 | 0.0086 | -0.34% | -0.40% |
| Dollar in British pounds | £0.5047 | £0.5069 | -0.0022 | 0.34% | 0.40% |
| Euro in dollars | $1.5718 | $1.5808 | -0.0089 | 0.63% | 7.54% |
| Dollar in euros | € 0.6362 | € 0.6326 | 0.0036 | -0.62% | -7.02% |
| Dollar in yen | 103.95 | 102.98 | 0.97 | 0.02% | -7.06% |
| Canadian dollar in U.S. dollars | $1.015 | $1.018 | -$0.0027 | 2.13% | 2.23% |
| U.S. dollar in Canadian dollars | $0.985 | $0.983 | $0.0026 | -2.09% | -2.25% |
| Commodities | |||||
| Gold | $918.30 | $882.10 | -$10.30 | 6.15% | 9.58% |
| Copper | $3.7125 | $3.7445 | -$0.03 | -4.92% | 22.08% |
| Silver | $18.0250 | $18.0500 | -$0.03 | 8.63% | 20.81% |
| Corn | $5.9575 | $6.0725 | -$0.12 | -0.75% | 30.79% |
| Crude oil (NYMEX) (per barrel) | $130.81 | $133.17 | -$2.36 | 15.29% | 36.29% |
Pfizer drug banned by FAA
The Federal Aviation Administration announced that Chantix, an anti-smoking drug marketed by Pfizer (PFE, news, msgs), will be banned from use by pilots and air traffic controllers, based on a report of serious side effects from the Institute for Safe Medication Practices.The study found hundreds of reported problems that included loss of consciousness, blurred vision and seizures.
"These data provide a strong signal that the risks (of Chantix) have been underestimated, and show that a wide spectrum of serious injuries are being reported in large numbers," the watchdog group said in its report. In January, the Food and Drug Administration warned that Chantix could cause mood changes and suicidal tendencies.
Pfizer protested, saying: "Often these reports lack sufficient medical information and/or have confounding factors that prevent a meaningful assessment of causality."
The drug has been prescribed 3.5 million times since it debuted in May 2006.
Pfizer shares fell 1.2% to $19.78 this afternoon.
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