- The Washington Times - Tuesday, February 7, 2006

NEW YORK (AP) — Declining oil prices and weakness in other commodities sent stocks lower yesterday, as investors took profits and beat up the stocks that led Wall Street’s early January rally.

Gold, silver, oil and other commodities retreated because they had gone too far, too fast, analysts said. Copper broke through $4,000 a ton three months ago and $5,000 a ton last week, according to Merrill Lynch.

Investors sold off oil-sector stocks after oil futures dropped more than $2 a barrel, but they didn’t move their money into financial or semiconductor stocks, as they did the last time oil dropped, said Matt Kelmon of the Kelmoore Strategy Funds. “People are selling off the winners they had in January,” he said.

The Dow Jones industrial average fell 48.51, or 0.45 percent, to 10,749.76. Broader stock indicators were also lower. The Standard & Poor’s 500 Index fell 10.24, or 0.81 percent, to 1,254.78, and the Nasdaq Composite Index fell 13.84, or 0.61 percent, to 2,244.96.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.57 percent, up from 4.54 percent late Monday. The dollar was mixed against major currencies. Gold prices declined.

Crude oil dropped as U.S. weather remained mild, inventories remained strong and Iran fears receded. A barrel of light crude settled at $63.09, down $2.02, in New York.

The mood on Wall Street seems to have changed, with investors returning to the jitters that largely defined 2005.

While yesterday’s earnings surprises were positive, with Walt Disney and Emerson Electric beating expectations, they weren’t enough to send the indexes higher.

One measure of the sentiment shift: One of Wall Street’s most bullish strategists, Prudential’s Ed Keon, cut his recommended stock weighting to 55 percent this week from the 100 percent he has recommended since July.

“The bull case for U.S. stocks took some hits last week,” he told clients. The weak GDP report led to an apparent drop in productivity and higher than expected rise in unit labor costs.”

Google illustrated the market’s “in today, out tomorrow” mentality. The stock fell $17.18, or 4.5 percent, to $367.92, as poor sentiment around the stock carried over from its Feb. 1 earnings report, which came in below analysts’ expectations.

Luxury home builder Toll Brothers fell $1.73, or 5.5 percent, to $29.47 after its sales rose 35 percent to $1.33 billion, but the company lowered guidance for this year, citing softening demand.

Apple Computer rose 30 cents to $67.60 after introducing a new discounted IPod music player. The company also cut prices on some other IPods.

Coca-Cola rose 9 cents to $41.03 after fourth-quarter profits dropped 28 percent but beat expectations excluding items.

Disney rose $1.74, or 7 percent, to $26.70 after reporting a better-than-expected 7 percent increase in net income. While profits at its studio slumped, increased advertising at ABC and ESPN and a strong theme park results helped.

The Russell 2000 Index of smaller companies fell 10.71, or 1.47 percent, to 717.18.

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