- The Washington Times - Tuesday, January 17, 2006

NEW YORK (AP) — Stocks skidded yesterday as oil prices rose past $66 a barrel and Wells Fargo & Co.’s and other banks’ earnings disappointed the market.

U.S. investors sold off equities as crude oil futures soared after an attack on an oil platform in Nigeria, the fifth-largest oil exporter to the United States. A barrel of light crude settled at a 3-month high of $66.31, up $2.39, in trading on the New York Mercantile Exchange.

Oil prices have been creeping higher for weeks, but the “sharp, violent rise” yesterday bit into stocks as investors consolidated gains from the first weeks of the month, said Steven Goldman, chief market strategist at Weeden & Co.

Disappointing bank earnings also spurred selling. Wells Fargo missed analysts’ expectations, saying a spike in personal bankruptcies in the fourth quarter hurt results. Cincinnati-based Fifth Third Bancorp said that its margins are narrowing and that its net interest income fell 2 percent from the year-ago period.

Falling international markets also troubled U.S. investors. Japan’s main stock index fell 2.84 percent, its biggest loss in nearly two years, after Tokyo-based Internet company Livedoor Co. was raided Monday evening on suspicion of securities law violations. The news sparked a sell-off of other Internet companies and pushed down auto and electronics stocks. Other international markets also dropped yesterday.

The Dow Jones Industrial Average fell 63.55, or 0.58 percent, to 10,896.32.

Broader stock indicators also dropped. The Standard & Poor’s 500 Index fell 4.68, or 0.36 percent, to 1,282.93, and the Nasdaq Composite Index lost 14.35, or 0.62 percent, to 2,302.69.

Bonds rose, with the yield on the 10-year Treasury note falling to 4.33 percent, from 4.36 percent late Friday. U.S. markets were closed Monday because of Martin Luther King Jr. Day. The U.S. dollar rose against other major currencies in European trading. Gold prices were lower.

All the major indexes had a strong start to the new year, hitting 4-year highs in the first two weeks of trading after minutes from the most recent meeting of Federal Reserve policy-makers showed that the central bank’s views on inflation were more moderate. Many investors took the minutes as a sign that the Fed’s 18-month streak of short-term interest rate increases was nearing its end.

More recently, trading has been choppy as investors reacted strongly to oil price increases or any hint of weak earnings.

“If oil continues to stay at these levels for a sustained period, it will bite into economic activity and renew inflationary pressure,” said Peter Cardillo, chief strategist, senior vice president and market analyst at S.W. Bach & Co. “That could put into question if and when the Fed will end its tightening cycle.”

In company news, US Bancorp, the nation’s sixth-largest bank by assets, fell 56 cents to $30.03 after its fourth-quarter results met analysts’ expectations. Wells Fargo, the nation’s fifth-largest bank, fell 65 cents to $62.60; Fifth Third fell 49 cents to $38.44.

Continental Airlines Inc. fell $2.23 to $17.24 after it posted a narrower fourth-quarter loss despite sharply higher fuel costs. For all last year, Houston-based Continental posted a loss of $68 million, or 97 cents per share, versus a loss of $409 million, or $6.25 per share, for a year earlier.

McDonald’s Corp. rose 12 cents to $34.59 after it said same-store sales, or sales at restaurants open at least one year, rose 5 percent last month on stronger sales of breakfast items in the United States and increasing sales abroad. The company also gave a fourth-quarter earnings outlook that is higher than analysts’ expectations.

The Russell 2000 Index of smaller companies fell 4.82, or 0.68 percent, to 703.62.

Declining issues led advancers by nearly 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume was 2.23 billion shares, from 2.25 billion on Friday.

Overseas, Britain’s FTSE 100 fell 0.72 percent, Germany’s DAX Index lost 0.99 percent, and France’s CAC-40 dropped 1.01 percent.

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