- The Washington Times - Tuesday, July 22, 2008

NEW YORK (AP) | Wall Street turned in a mixed performance Monday as investors watched the price of oil regain ground and decided to cash in some of their gains from the stock market’s big rally last week.

While the stock market’s major indexes showed modest losses, the number of stocks advancing outpaced decliners by about 2 to 1 on the New York Mercantile Exchange, and by about 4 to 3 on the Nasdaq Stock Market.

The tame session unfolded as oil rose on concerns that the threat of new sanctions against Iran over its nuclear program may escalate tensions in the Middle East. Light, sweet crude rose $2.16 to settle at $131.04 a barrel on the New York Mercantile Exchange.

The rise in oil offset initial market enthusiasm after Bank of America Corp. posted results that beat expectations, raising hope the credit crisis might be easing for the nation’s biggest retail banks. The second-largest U.S. bank by assets reported that higher investment banking and record revenue helped drive earnings during the second quarter.

With Bank of America’s results, four of the nation’s five biggest banks have now reported better-than-expected earnings, and that’s raising hopes that the financial sector is starting to recover from the year-old credit crisis.

Still, “with crude trading up near $130, and a big advance last week, some investors are taking chips off the table,” said Jim Herrick, manager of equity trading at Baird & Co. “We’re going to be in a tight trading range this week based on earnings and oil prices. I expect more of the same.”

The Dow Jones Industrial Average fell 29.23, or 0.25 percent, to 11,467.34 after moving in and out of positive territory. Broader indexes showed more modest declines. The Standard & Poor’s 500 Index slipped 0.68, or 0.05 percent, to 1,260.00; and the Nasdaq Composite Index dropped 3.25, or 0.14 percent, to 2,279.53.

Some 158 members of the Standard & Poor’s 500 Index and 10 of the 30 Dow industrials are slated to post results this week. The biggest on Monday was Bank of America, which reported that more bad debt due to the housing slump pushed profits down 41 percent. However, it still surpassed expectations due to a solid performance in its business not tied to real estate. The stock rose $1.07, or 3.9 percent, to $28.56.

But another Dow component weighing in after the closing bell could rattle investor sentiment. American Express Co.’s second-quarter profit tumbled 38 percent - results that came in well short of expectations - as consumer spending slowed and credit indicators deteriorated beyond the company’s expectations. The stock fell $1.29, or 3.1 percent, to $40.90 on the day and declined more than 10 percent in after-hours electronic trading.

In economic news, Treasury Secretary Henry M. Paulson Jr. sought to reassure the public Sunday that the banking system is sound, while also preparing people for more troubled times ahead. “I think it’s going to be months that we’re working our way through this period - clearly months,” he said.

And that forecast was confirmed by more economic data Monday. The Conference Board said the economy contracted in June. The research group’s index of leading economic indicators, a gauge of future economic activity, fell 0.1 percent, in line with estimates by Wall Street economists surveyed by Thomson Financial/IFR. It also revised its May figure to show a decline instead of slight growth.

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