Energy Sector Damps Stocks
A profit warning from Chevron and a weak reading of consumer confidence kept a leash on stocks Friday.
Major indexes were mixed. The Dow Jones Industrial Average was down 60 points, or 0.7%, at 8122.33, hurt by a 3.3% decline in component Chevron after the oil giant said that poor profits at refineries and the financial impact of a weakening U.S. dollar will damp the benefit of higher crude-oil prices in its second-quarter results.
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The comments exemplified one of the main risks for investors this earnings season. According to Thomson Reuters, analysts are expecting a slide of about 36% in the S&P 500's overall profits, led by big declines at basic-materials and energy firms who benefited a year ago from the last throes of a commodity bubble that has since burst.
Other blue-chip commodity names were mixed on Friday. Exxon Mobil was off 1.6%, while Alcoa was up 1.6%.
The market's losses briefly deepened but then leveled off again following the release of worse-than-expected data on consumer confidence. Reuters and the University of Michigan said their monthly index of sentiment fell to 64.6 this month from 70.8 in June. Analysts expected the measure to remain relatively steady, at 70.5 for July.
"That report really got things going to the downside a little bit," said David Bellantonio, head of trading at Instinet, a New York brokerage. "We're also still in a low-volume environment, so you can get these little, quick moves that just take off."
About 160 million shares had changed hands on the New York Stock Exchange's floor in recent action, with decliners outnumbering advancers almost two to one.
The Nasdaq Composite Index was up 0.5%. The S&P 500 was down 0.5%, led by declines in its energy sector, off 1.3%, and financials, off 1.2%.
In other economic news Friday, the trade deficit unexpectedly narrowed in May to its lowest level since November 1999 as exports grew and imports sank despite rising oil prices. Also, import prices jumped in June, matching their largest increase in nearly two decades, as soaring oil prices and a weaker U.S. dollar further lowered the odds of deflation.
Crude-oil futures traded below $60 a barrel. The International Energy Agency reiterated its view for a 2009 global oil demand decline, though the Paris-based agency said it sees an improvement in 2010.
Overseas, the Nikkei 225 ended nearly flat as shipping stocks struggled, though several Chinese firms made strong debuts. In Europe, stocks were weaker.
The dollar was mixed. One euro cost $1.3936, down from $1.4032 late Thursday. One dollar fetched 92.32 Japanese yen, down from 92.95 yen.
Treasury prices rose. The benchmark 10-year note was up 21/32 to yield 3.333%.
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