Jan 9, 2007 1:20 pm US/Pacific
Wall Street Tumbles On Earnings
NEW YORK (AP) ―
Wall Street was mixed in an erratic session Tuesday as investors, uneasy about approaching earnings reports, debated whether the drop in oil prices would eventually bring stocks down as well.
Investors had already lost some of their recent ebullience going into the earnings season, worried that 18 straight quarters of double-digit growth in Standard & Poor's 500 companies might be ending. The market was skittish after Sprint Nextel Inc. warned that its 2007 results will miss analyst projections, and after another half-dozen companies warned Monday that fourth-quarter results will come up short.
But investors also wrestled with the positive and negative effects of a continued slide in oil prices. Warm weather in the Northeast has weakened demand for energy, and at one point drove a barrel of oil to below $54 a barrel.
Not only did this bring shares of major oil and gasoline companies to two-month lows, but caused institutional investors like hedge funds to unwind positions, analysts said. Some big investors might be taking cash off the table on concern demand for crude might not re-emerge in the near term.
"There's a huge financial position on the point of hedge funds and other financial players having positions in oil futures," said Jason Maxwell, a managing director with Trust Company of the West. "People might be unwinding that position because there's so much supply that its dangers that oil is pegged higher six months from now."
According to preliminary calculations, the Dow fell 6.89, or 0.06 percent, to 12,416.60. Meanwhile, the broader S&P 500 index dropped 0.73, or 0.05 percent, at 1,412.11.
Technology stocks went against the overall market, with the Nasdaq composite index rose 5.63, or 0.23 percent, to 2,443.83. Leading the composite was a jump in Apple Computer Inc. after unveiling its long-anticipated iPhone.
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