- The Washington Times - Tuesday, June 17, 2008

Lehman Brothers posted results.

Stocks spent much of the session mostly lower after a fresh record for crude oil and a decline in regional manufacturing activity touched off concerns about the ability of the economy to push ahead.

But more buyers turned out following an afternoon retreat in oil. And financials were among the biggest gainers after Lehman offered more insights into its financial well-being.

The day’s eventual gains followed worrisome economic news. The New York Federal Reserve Bank’s Empire State index indicated that manufacturing activity in New York continued to weaken in June. The index fell to a negative 8.7 from a negative 3.7 a month earlier. The report is the earliest of several monthly regional snapshots that investors look to for insights on economic activity.

The manufacturing report and an early jump in energy prices fanned worries that rising prices in an already-uncertain economy will cause consumers to tamp down spending. A pullback could deal a blow to the economy, as consumer spending accounts for more than two-thirds of U.S. economic activity.

Calif., said that in addition to a pullback in oil, the gains in financial stocks helped reinforce confidence in the overall market.

“You’re finally seeing some stability in the financials,” he said. He pointed to Lehman’s results: “They gave more information. The fact that they’re becoming less leveraged, more transparent - all that’s positive.”

The Dow Jones Industrial Average fell 38.27, or 0.31 percent, to 12,269.08 after being down more than 95 points early in the session.

Broader stock indicators were mixed. The Standard & Poor’s 500 index added 0.11, or 0.01 percent, to 1,360.14. The Nasdaq Composite Index, which contains many technology names, rose 20.28, or 0.83 percent, to 2,474.78.

Advancing issues outnumbered decliners by about 3 to 2 on the New York Stock Exchange, where volume came to a light 1.23 billion shares.

The moves follow a strong session Friday that left the Dow with a weekly advance and lessened the declines that the S&P; 500 and the Nasdaq posted for the week.

Treasury prices firmed after falling sharply last week amid worries that inflation would erode returns. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged from Friday’s 4.26 percent.

The dollar was mixed against other major currencies, while gold prices rose.

Early on Monday a weak dollar helped drive the price of a barrel oil to a record near $140 while retail gas prices etched a new high of $4.08 a gallon. Light, sweet crude set a trading record of $139.89 a barrel on the Saudi Arabia to increase oil production.

Lehman’s report, which matched a week-old forecast from the company, appeared to assuage some concerns about the ability of the financial sector to extricate itself from bad bets on mortgage debt. The nation’s No. 4 investment bank posted a second-quarter loss of $2.87 billion, or $5.14 per share. The loss is the first for Lehman since it went public in 1994. Lehman rose $1.14, or 4.5 percent, to $26.98.

Mr. Campagna said investors appeared to be making modest bets ahead of quarterly results due Tuesday from investment bank Goldman Sachs Group Inc.

“No one is really willing to let the market run and dive in until they hear from Goldman,” he said.

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