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| Currency | US Dollar |
|---|---|
| British Pound to US Dollar | 1.875469 |
| Euro to US Dollar | 1.488760 |
| Japanese Yen to US Dollar | 0.009184 |
| Canadian Dollar to US Dollar | 0.957763 |
The stock market fell back this afternoon as crude oil finished at $137 a barrel and as investors await the Federal Reserve's Wednesday decision on interest rates.
The Dow Jones industrials finished down 35 points, or 0.3%, to 11,807. The Nasdaq Composite Index dropped 17 points, or 0.7%, to 2,368, and the Standard & Poor's 500 Index was down 4 points, or 0.3%, to 1,314.
The Fed began a two-day meeting on interest rates today. At 2:15 p.m. ET Wednesday, it's likely to announce that it is leaving its key federal funds rate unchanged at 2% due to concern about inflation. The fed funds rate is what banks charge each other for overnight loans and is the basis for most U.S. interest rates.
Also on Wednesday, the Commerce Department will report on new home sales during May. Important earnings reports will come from General Mills (GIS, news, msgs), Monsanto (MON, news, msgs), Oracle (ORCL, news, msgs), Herman Miller (MLHR, news, msgs) and Research In Motion (RIMM, news, msgs), maker of the BlackBerry mobile device.
While the Fed limited any big moves for the overall market today, the rule that's governed stocks for weeks still applied: Stocks fall when oil rises and stocks rise when oil falls.
The rule was in full force today as crude started higher, then fell back and finally rallied to $137, up 26 cents. Crude has risen despite moves by Saudi Arabia to boost production and talk oil prices lower. Crude is up nearly 43% this year.
Fourteen of 30 Dow stocks were higher today, along with 201 S&P 500 stocks and 40 Nasdaq-100 ($NDX.X) stocks. The Nasdaq-100 was off 10 points, or 0.5%, to 1,904.
Merck (MRK, news, msgs) was the Dow leader, up 3.4% on hopes that the company will announce a big stock buyback. Caterpillar (CAT, news, msgs) was the Dow laggard, falling 4.2% to $76.64 after it said it would buy Brazil's MGE Equipamentos & Servicos Ferroviarios, which makes and reconditions train components.
Although most indexes fell back, there were gains among beleaguered financial and homebuilding stocks. Lehman Bros. (LEH, news, msgs) was up 6.8% to $24.35; Morgan Stanley (MS, news, msgs) added 2.6% to $38.43. The Amex Securities Broker/Dealer Index ($XBD.X) was up 1.1% to 156. The Standard & Poor's Banking Index ($BIX.X) was up 3.2% to $186, with Wachovia (WB, news, msgs) jumping 5.6% to $17.86.
Homebuilders were up after Credit Suisse started coverage of the sector and suggested a bottom for the group will be reached in mid-2009. D.R. Horton (DHI, news, msgs) was up 7.3% to $12.62, and the Philadelphia Housing Sector Index ($HGX.X) was up 1% to 115. The builder gains offset the bad news from the Standard & Poor's/Case-Shiller home-price index of 20 cities. The index fell 15.3% in April from a year ago, the largest drop since its inception in 2000.
Transportation and chemical stocks were lower because of warnings from package shipper United Parcel Service (UPS, news, msgs) and Dow Chemical (DOW, news, msgs).
Crude was pressured for most of the day in part because of a report from MasterCard (MA, news, msgs) suggesting U.S. gasoline demand fell nearly 3% from a week earlier. In addition, Royal Dutch Shell (RDS.A, news, msgs) said it had resumed production at its Nigerian Bonga field, which was attacked last week. Royal Dutch Shell was up 10 cents to $78.33 in New York.
Energy and commodity stocks were mostly lower. The Amex Oil Index ($XOI.X) was off 1.2% to 1,515, and the Amex Natural Gas Index ($XNG.X) was off 2.6% to 742. The Select Sector SPDR-Materials (XLB, news, msgs) exchange-traded fund, which mirrors the materials sector of the S&P 500, was off 1.9% to $42.87. Freeport-McMoRan Copper & Gold (FCX, news, msgs) fell 2.4% to $115.72.
Overall volume was light, however, because many investors are waiting for the Federal Reserve's decision Wednesday on interest rates.
While the Dow is still looking at its worst performance since September 2002, weak markets shouldn't be too much of a worry, said one expert. "We see no early end to this volatility, but we do still feel that a second-half rally is not just possible but likely," Kevin Gardiner, head of equity strategy at HSBC, told MarketWatch.com.
Former Fed Chairman Alan Greenspan chimed in on the mood of the markets, too.
"Things do at this particular stage look a little better," Greenspan told listeners at a conference in Johannesburg, South Africa.
The former Fed chief wasn't all rosy, though: "This crisis, I fear, is going to be with us for a while," either for a "good number of months or into next year."
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Crude oil (NYMEX) (per barrel) | $137.00 | $136.74 | $0.26 | 7.58% | 42.74% |
| Heating oil (per gallon) | $3.8136 | $3.7964 | $0.0172 | 4.01% | 43.94% |
| Natural gas (per million BTU) | $13.0110 | $13.2030 | -$0.1920 | 11.18% | 73.87% |
| Unleaded gasoline (per gallon) | $3.4635 | $3.4551 | $0.0084 | 3.44% | 39.05% |
The Yahoo deal that wasn't -- at least for today
There was a bit of excitement this afternoon when the TechCrunch blog said that Yahoo (YHOO, news, msgs) and Microsoft (MSFT, news, msgs) were finally close to a deal.Yahoo shares jumped as much as 9% to $23.71 on the report, but CNBC's Jim Goldman said sources told him there was no deal. TechCrunch insisted, however, late today that talks were ongoing, although no offer has been made.
Yahoo fell back to $22.04 but still had a 2.8% gain, good for sixth among Nasdaq-100 stocks.
Microsoft was off 0.9% to $27.73. (Microsoft is the publisher of MSN Money.)
Fuel costs hit UPS
UPS shares were off 6% to $62.26 today, the worst performance among the 20 stocks in the Dow Jones Transportation Index ($DJT). The index was off 1.9% to 4,998.Late Monday, UPS said jumping fuel costs were forcing the company to cut its second-quarter outlook. The new guidance is 83 cents to 88 cents per share, down from a previous forecast of 97 cents to $1.04 a share.
UPS has been hit by soaring jet fuel and gasoline costs. But the company said jet fuel was the bigger problem. "It's hard to compensate for that until things even out and calibrate a little bit," Chief Financial Officer Kurt Kuehn said in a statement. Jet-fuel costs have jumped 30% in the quarter, and it takes the company two months to recover the expenses through surcharges, Kuehn added.
Kuehn also said the economy is still "sluggish," and that manufacturing "continues to deteriorate."
"The weak U.S. economy, record high fuel costs and shippers trading down -- you combine all these things and it's a tough environment," Craig Hutson, a bond analyst at independent research firm Gimme Credit, told Bloomberg News.
Rival FedEx (FDX, news, msgs) was off 0.2% to $79.98.
United to lay off pilots
UAL's (UAUA, news, msgs) United Airlines, said late Monday that it will lay off 950 pilots, or about 14% of its total, to cut costs. Because of the late-day oil rally, UAL shares fell 1.3% to $6.01.The airline recently said it will reduce capacity by 15%, including approximately 1,000 salaried and management jobs beyond the previously announced 500 job cuts. The first pilot layoffs will take place in September.
Stock Charts (Year)
UPS
UAL
Dow Chemical
The Air Transport Association expects fuel expenses to cost the airline industry $61.2 billion in 2008, up more than 48% from last year.
Dow Chemical to boost prices (again)
Dow Chemical (DOW, news, msgs) announced a second series of price increases this morning -- and once again, put the blame on rising energy costs.Dow Chemical said it will raise prices by as much as an additional 25% beginning in July; it raised prices by 20% in late May.
"The price increases we announced on May 28 helped, but they were not enough to fully cover the additional costs we are now facing," CEO Andrew Liveris said in a statement. "For the first half of 2008, our feedstock and energy costs are up more than 40 percent compared with the same six months of last year. Even since our last announcement, the cost of hydrocarbons has continued to rise, and that trajectory shows no sign of changing."
Dow Chemical expects to spend $32 billion on energy this year, more than four times what it spent four years ago.
Dow shares fell 2.8%, to $36.58. Rival DuPont (DD, news, msgs) was down 3.3% to $43.96.
Kodak to buy back shares
Eastman Kodak (EK, news, msgs) shareholders are smiling about the company's plan to repurchase about 25% of its outstanding shares, worth $1 billion.The stock jumped 13.7% to $14.03 on the buyback news.
Kodak also said it received a tax refund of $581 million related to the audit of claims filed between 1993 and 1998.
Home prices fall
A report from S&P/Case-Shiller this morning showed that prices are still falling.The S&P/Case-Shiller index of 20 U.S. metropolitan areas declined by 15.3% in April from the same month last year, in line with economists' expectations. The decline was the worst since the group began recording home prices in 2001. The index had fallen 14.4% year over year in March.
The group's 10-city index slumped 16.3% in April.
"The weakness in prices is going to persist," Ken Mayland, president of ClearView Economics, told Bloomberg News. "The mind-set has yet to change. We'll be looking at year-over-year declines in home prices well into 2009."
Prices have to go down in order for the housing market to recover, real-estate developer Don Peebles told CNBC this morning.
In other economic news, the Conference Board's report on consumer confidence came in at a reading of 50.4 in June -- the lowest level since February 1992, and the fifth-lowest reading on record. Economists had expected a reading of 56.
June's dismal number follows a revised reading of 58.1 in May.
The percentage of Americans who said it is difficult to find a job rose to 30.5% in June from 28.3% in May.
Google to introduce new ad services
Google (GOOG, news, msgs), already the No. 1 Internet search provider, has another trick up its sleeve, according to The Wall Street Journal.The company plans to unveil a new service that will measure Internet usage, the paper reported -- a move that will help advertisers locate the best spots to buy online advertisements for their target audiences.
The report said the new service will likely hurt comScore (SCOR, news, msgs) and Nielsen Online, which sell Internet usage data; Google plans to offer the service for free.
Shares of Google slipped 0.5% to $542.30. ComScore tumbled 22.5% to $21.45.
Meanwhile, Yahoo on Monday launched a program called "Smart Ads" for its HotJobs Web site. The program's features will help employers target relevant job listings to specific job recruits.
| Tues. | Mon. | Chg. | Month chg. | YTD chg. | |
|---|---|---|---|---|---|
| Treasurys | |||||
| 13-week Treasury bill | 1.795% | 1.850% | -0.055 | -2.97% | -42.83% |
| 5-year Treasury note yield | 3.536% | 3.620% | -0.084 | 3.79% | 2.34% |
| 10-year Treasury note yield | 4.105% | 4.168% | -0.063 | 1.46% | 1.73% |
| 30-year Treasury bond yield | 4.658% | 4.710% | -0.052 | -1.04% | 4.46% |
| Currencies | |||||
| U.S. Dollar Index | 73.600 | 73.815 | -0.215 | 0.89% | -4.04% |
| British pound in dollars | $1.9716 | $1.9662 | 0.0054 | -0.59% | -0.89% |
| Dollar in British pounds | £0.5072 | £0.5086 | -0.0014 | 0.59% | 0.90% |
| Euro in dollars | $1.5574 | $1.5526 | 0.0048 | 0.10% | 6.56% |
| Dollar in euros | € 0.6421 | € 0.6441 | -0.0020 | -0.10% | -6.15% |
| Dollar in yen | 107.81 | 107.84 | -0.03 | 1.34% | -3.61% |
| Canadian dollar in U.S. dollars | $0.989 | $0.985 | $0.0047 | -1.76% | -0.36% |
| U.S. dollar in Canadian dollars | $1.011 | $1.016 | -$0.0045 | 1.78% | 0.35% |
| Commodities | |||||
| Gold | $891.60 | $887.20 | $4.40 | 0.48% | 6.40% |
| Copper | $3.7865 | $3.8080 | -$0.02 | 5.01% | 24.51% |
| Silver | $16.6330 | $16.7900 | -$0.16 | -1.38% | 11.48% |
| Corn | $7.1250 | $7.2425 | -$0.12 | 18.90% | 56.42% |
| Crude oil (NYMEX) (per barrel) | $137.00 | $136.74 | $0.26 | 7.58% | 42.74% |
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