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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.633720 |
| Euro to US Dollar | 1.398406 |
| Japanese Yen to US Dollar | 0.010414 |
| Canadian Dollar to US Dollar | 0.861846 |
Crude oil closed under $132 a barrel today for the first time in seven sessions after China announced it will increase prices on gasoline and diesel fuel to boost production and trim demand.
The oil drop gave stocks a bit of a lift after struggling for most of the day. The Dow Jones industrials closed up 34 points to 12,063. The Standard & Poor's 500 Index was up 5 points to 1,343, and the Nasdaq Composite Index was up 32 points to 2,462.
Crude closed at $131.93 a barrel, down $4.75, or 3.5%, from Wednesday and the lowest close since June 10, when it finished at $131.31.
China said today that it will raise diesel prices 18% and gasoline prices 17% starting Friday. The move is designed to get refiners to produce more fuel. In addition, higher prices may trim Chinese demand. Burgeoning demand has boosted inflation in China and has been cited as a major reason why oil and gasoline prices have tripled since the end of 2004.
Whether the drops in crude and wholesale gasoline will translate to relief at the gas pumps in the U.S. remains to be seen.
The national retail price of gasoline was at $4.07 a gallon today, down very slightly from Wednesday, according to AAA's daily survey.
It can take days before it is clear that a price break is going to last for some time. But crude is down 4.8% from its closing record of $138.54, set on June 6, and 5.7% from its intraday high of $139.89, set on Monday. And there are growing global pressures trying to push crude lower, including a meeting Sunday in Saudi Arabia between producing and consuming nations.
Analysts had been expecting China to follow the lead of other oil-consuming countries that have lifted subsidies in recent weeks. "But no one expected it before this summer's Olympic Games, which is why the market reacted so violently," Ray Carbone, the president of Paramount Options in New York, told CNNMoney.
Strong demand from China's booming economy has helped push crude prices higher. A change in the government's policy of controlling gas and diesel prices could mean higher gas prices for Chinese consumers, undercutting demand.
China's decision is a "blow to demand that can't be taken lightly," Carbone said.
| Thur. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $131.93 | $136.68 | -$4.75 | 3.60% | 37.46% |
| Heating oil (per gallon) | $3.7135 | $3.8600 | -$0.1465 | 1.28% | 40.16% |
| Natural gas (per million BTU) | $12.8610 | $13.2100 | -$0.3490 | 9.89% | 71.87% |
| Unleaded gasoline (per gallon) | $3.3526 | $3.4667 | -$0.1141 | 0.13% | 34.60% |
Oil fall lifts airlines; financials rebound
The market's uptick was largely due to the drop in oil and a rebound in financial stocks off lows in the early afternoon. Tech stocks were strong all day.Sixteen of the 30 Dow stocks were higher on the day, along with 370 S&P 500 stocks and 80 Nasdaq-100 ($NDX.X) stocks. The Nasdaq-100 was up 32 points to 1,983.
Oil's fall sent airline stocks sharply higher, pushing the Amex Airline Index ($XAL.X) up 10.3% to 19.45 and the Dow Jones Transportation Index ($DJT) up 172 points, or 3.4%, to 5,293. Continental Airlines (CAL, news, msgs), up 16% to $15.59, led the Dow transports. American Airlines' parent, AMR Corp. (AMR, news, msgs), jumped 15.6% to $6.31.
Fuel is the biggest cost item for carriers, so anytime oil prices drop, airline stocks jump.
Late today, Continental and UAL's (UAUA, news, msgs) United Airlines announced a marketing alliance that will help them forge close domestic ties and act in concert on international routes.
But the oil drop also hit energy stocks, the market's strongest segment this year, and limited the market's gains. The Amex Oil Index ($XOI.X) and the Amex Natural Gas Index ($XNG.X) both fell 2.2%.
ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) were off 2.3% to $85.79 and 2.4% to $96.86, respectively.
The Nasdaq rallied on strength in such stocks as Apple (AAPL, news, msgs), Research In Motion (RIMM, news, msgs) and Intel (INTC, news, msgs).
Citigroup (C, news, msgs) had pushed financial stocks lower after warning that it expects more write-downs in the value of mortgage-related securities. But a rebound across financial stocks set in late in the afternoon. Citigroup, down as much as 4.9% shortly after 1 p.m., recovered to a loss of just 1.1% at $20.17.
Gary Crittenden, Citigroup's chief financial officer, said the banking giant's second-quarter markdowns won't be as large as the $6 billion recorded for the first quarter. He made the comment during an investor conference call hosted by Deutsche Bank.
JPMorgan Chase (JPM, news, msgs) was off 0.2% to $38.65, and Bank of America (BAC, news, msgs) was off 0.8% to $28.14.
Fifth Third Bancorp (FITB, news, msgs), the Cincinnati banking company whose shares dropped 27% on Wednesday, rebounded 5.3% today to $9.25 in regular trading and an additional 1.6% to $9.91 in after-hours trading.
The Dow had fallen under 12,000 soon after the open and again in the late morning but rebounded each time. Analysts see 12,000 as psychologically important. Until Wednesday, the Dow had not been under 12,000 since March.
Meanwhile, the S&P 500 has been flirting with a support level of around 1,326. Whenever an index or stock hits a support level, the theory goes, buyers in search of bargains will step in.
The concern is that, if the index falls below that level, it could drop under 1,300.
Carnival bookings boost stock; Smucker shares fall
The bad news for cruise line operator Carnival (CCL, news, msgs): Rising fuel prices will cost the company an extra $752 million this year and cut earnings by 92 cents a share.The good news: Carnival said passenger bookings for the next 12 months are in line with the prior year, with ticket prices at higher levels.
Result: The stock jumped 5.4% to $36.84, sixth-best among S&P 500 stocks.
Stock Charts (Year)
Carnival
JM Smucker
Analysts had expected full-year earnings of $2.97, Reuters said.
Carnival said it earned $390 million, or 49 cents per share in its fiscal-second quarter, compared with $390 million, or 48 cents per share, in the same period a year ago. Analysts had projected earnings at 42 cents a share, Reuters said. Revenue was up $500 million to $3.4 billion.
Meanwhile, jam-and-jelly maker JM Smucker (SJM, news, msgs) saw its shares fall 8.8% to $45.55 after the company said higher ingredient costs -- particularly soybean oil and wheat -- knocked profits down 13% from a year ago.
Smucker said it earned $37.1 million, or 67 cents a share, in the fiscal-fourth quarter, down from $42.5 million or 75 cents a year ago. Revenue was up 20% to $590 million. In addition to the jams, Smucker also makes Jif peanut butter and Crisco oils.
Leading indicators up modestly
In economic news, the Conference Board's index of leading indicators came in at 0.1% in May, slightly better than economists' expectation for no change in the index. The index rose 0.1% in April.The index forecasts economic activity for the next three to six months by gauging 10 indicators of momentum, such as stock prices, jobless claims and building permits.
A separate report on the manufacturing sector showed continued contraction in the Philadelphia area.
The Philadelphia Federal Reserve's manufacturing index registered negative 17.1 in June, worse than the negative 15.6 reading in May. The reading was also worse than economists' predictions of a negative 10 reading.
Readings below zero indicate contraction.
"It's not a pretty environment," Brian Bethune, the director of financial economics at Global Insight, told Bloomberg News. "The housing market is very weak, and there are a lot of pressures out there on the consumer."
On Monday, the New York Fed's Empire State manufacturing index declined to a reading of negative 8.7 from negative 3.2 in May.
Paulson calls for more oversight
Treasury Secretary Hank Paulson called for faster changes to the oversight of financial markets that would expand the role of the Federal Reserve.Paulson first pushed for changes to the system in March, when he advocated a bigger role for the Federal Reserve in regulating financial markets. The Fed said then for the first time that it would lend funds to investment banks; before, the Fed lent only to commercial banks. Before, the Fed lent only to commercial banks. The change was an effort to contain the fallout from Bear Stearns' demise.
Paulson has been huddling with Fed chief Ben Bernanke and Christopher Cox, the chairman of the Securities and Exchange Commission, to consider what will happen after the Fed’s temporary lending facility expires in September.
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"We should quickly consider how to most appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene in order to protect the system, so they can carry out the role our nation has come to expect -- stabilizing the overall system when it is threatened," Paulson told a meeting of the Women in Housing and Finance in Washington, D.C.
2 former Bear Stearns managers charged
Ralph Cioffi and Matthew Tannin were indicted on securities fraud charges in the wake of the collapse of the subprime-mortgage market, federal authorities said today. The former Bear Stearns hedge fund managers are suspected of misleading investors about the risky subprime market, federal officials said.Both men were arrested and arraigned today in New York.
Cioffi and Tannin have been under investigation since last summer, when the hedge funds they managed collapsed, setting in motion the credit mess that eventually led to Bear's collapse and has plagued the broader markets for most of the past year.
The indictments point to e-mail between the two managers, which indicated the funds were in trouble just four days before they told investors that things were OK. The funds ended up imploding last July, and investors lost $1.6 billion.
Separately, federal authorities announced Thursday that more than 400 real estate industry players have been indicted since March — including dozens over the past two days — in nationwide crackdown on mortgage fraud that has contributed to the country’s housing crisis.
More from MSN Money
AIG gets an upgrade; UBS is downgraded
American International Group (AIG, news, msgs) was up 4.9% to $33.07 after Citigroup analysts upgraded the stock to "buy" from "hold."Swiss bank UBS (UBS, news, msgs) was downgraded to "neutral" from "outperform" by Credit Suisse, sending shares lower by $1.11, or 4.2%, to $23.07.
Shares of Huntsman (HUN, news, msgs) tumbled more than 38% today to $12.86 after the stock was downgraded to "underperform" from "hold" at Jefferies. Jeffries downgraded the stock after Hexion Specialty Chemicals said it might walk away from a $10.6-billion deal to buy Huntsman.
Hexion, controlled by private-equity firm Apollo Management, sued Huntsman, asking a Delaware court to void the deal. Hexion says that Huntsman's finances have weakened so substantially that a buyout no longer makes sense.
"We expect prolonged litigation to add to the uncertainty for Huntsman," wrote Jefferies analyst Laurence Alexander in a note to clients.
Hexion offered $6.5 billion for Huntsman in July 2006. Hexion was also planning to assume Huntsman's $4.1 billion in debt.
| Thur. | Fri. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.860% | 1.880% | -0.020 | 0.54% | -40.76% |
| 5-year Treasury note yield | 3.651% | 3.564% | 0.087 | 7.16% | 5.67% |
| 10-year Treasury note yield | 4.199% | 4.154% | 0.045 | 3.78% | 4.06% |
| 30-year Treasury bond yield | 4.751% | 4.730% | 0.021 | 0.93% | 6.55% |
| Currencies | |||||
| U.S. Dollar Index | 73.870 | 73.840 | 0.030 | 1.26% | -3.68% |
| British pound in dollars | $1.9724 | $1.9585 | 0.0139 | -0.55% | -0.85% |
| Dollar in British pounds | £0.5070 | £0.5106 | -0.0036 | 0.55% | 0.86% |
| Euro in dollars | $1.5521 | $1.5547 | -0.0027 | -0.25% | 6.19% |
| Dollar in euros | € 0.6443 | € 0.6432 | 0.0011 | 0.25% | -5.83% |
| Dollar in yen | 107.92 | 107.81 | 0.11 | 1.44% | -3.51% |
| Canadian dollar in U.S. dollars | $0.987 | $0.983 | $0.0041 | -1.97% | -0.57% |
| U.S. dollar in Canadian dollars | $1.014 | $1.018 | -$0.0044 | 2.02% | 0.59% |
| Commodities | |||||
| Gold | $904.20 | $893.50 | $10.70 | 1.90% | 7.90% |
| Copper | $3.7780 | $3.7475 | $0.03 | 4.77% | 24.24% |
| Silver | $17.4700 | $17.3400 | $0.13 | 3.59% | 17.09% |
| Corn | $7.2775 | $7.4625 | -$0.19 | 21.44% | 59.77% |
| Crude oil (NYMEX) (per barrel) | $131.93 | $136.68 | -$4.75 | 3.60% | 37.46% |
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