Stocks End July Mixed as Oil Falls 11%
Stocks ended July mixed as financials took the lead and oil started falling back toward Earth.
The Dow Jones Industrial Average fell more than 200 points, or 1.8 percent, Thursday, accelerating its decline in the final hour of trading after remarks from former Federal Reserve Chairman Alan Greenspan.
The blue-chip index had already been under pressure following disappointing earnings from a trio of components and a worrisome jump in jobless claims. The S&P 500 index dropped 1.3 percent, while the Nasdaq got off with a modest loss of 0.2 percent after a boost from a bid for ImClone.
For the month, the Dow Jones Industrial Average gained 0.3 percent, while the S&P 500 index shed 1 percent and the Nasdaq jumped 1.4 percent. All three indexes finished the month safely out of bear territory.
Crude oil fell about $2 today, ending the month at $124.08 a barrel after a sharp jump in the previous session. Oil has dropped nearly $16, or 11 percent, since the end of June.
Investors were a little bit jittery about the prior session's $4-a-barrel runup, but market pros said it was likely just a retracement after how far and how fast oil fell.
Bruce McCain, head of investment strategy at Key Private Bank in Cleveland, said fundamentals have led his team to believe oil's going back down -- perhaps below $100 -- but may pop up to the mid $130s before it gets there.
Financials were the month's biggest gainer, rallying 6.8 percent, while health-care stocks gained 5 percent.
Leading financials -- and the Dow -- in July was Bank of America , which advanced 38 percent; Rohm and Hass led health care with a gain of 62 percent.
UAL led the Nasdaq 100, soaring 59 percent.
Freddie Mac was the biggest drag on the S&P, sliding 50 percent.
(Note: An earlier version of this story said engineering firm Fluor was the biggest decliner on the S&P 500 in July, falling 56 percent. That was incorrect due to a data error that did not account for the stock's recent split. Fluor stock actually dropped 12 percent in July, and was not among the top decliners on the S&P.)
In Thursday's market action, the three biggest drags on the Dow were: Altria, Disney and ExxonMobil.
Altria beat forecasts, helped by higher prices, but the number of cigarettes shipped by Philip Morris USA fell short of expectations. Its shares dropped 6.2 percent.
Walt Disney beat earnings estimates and reported that park bookings were flat, an encouraging sign that cash-strapped consumers aren't cutting back on their expensive Disney vacations. However, Disney shares fell 4.2 percent as investors worried about weakness in advertising salesand that the economic slump might soon hit the parks division.
Of course, oil giants posted blockbuster earnings but Exxon Mobil shares declined 4.7 percent as the oil giant's record $11.7 billion profit disappointed investors. Analysts noted that Exxon's results were hurt by sharp declines in production in most regions, and weak margins on gasoline.
ImClone shares shot up 38 percent after Bristol-Myers Squibb offered to buy the biotech for $60 a sharein a deal that would give it full control of the cancer drug Erbitux. BMY shares dropped nearly 2 percent.
Motorola reported earnings of 1 cent a share, beating analyst estimates, and boosted its 2008 outlook. Analysts said the handset maker sold more phones and held onto more market share than expected. Motorola shares jumped 13 percent.
Greenspan rattled the market in the last hour of trading, sending the Dow down another 100 points, after he told CNBC in an interview that the government would likely end up nationalizing Fannie Mae and Freddie Mac.
Both Fannie and Freddie shed about 6 percent.
Economic news came in mixed.
(Is it time to ride the bull again? Two market pros weigh in. Click on the video at left.)
Gross domestic product, the best gauge of economic growth, rose just 1.9 percent, the Commerce Department said.
GDP is a lagging indicator and strategists weren't planning to give it much weight, given the skew of the rebate checks. The market was more troubled by jobless claims, which jumped by 44,000 last week to 448,000, the highest level since April 2003.
Manufacturing activity in the Midwest rose unexpectedlyin July, snapping a five-month run of contraction as new orders began to tick higher. The National Association of Purchasing Management-Chicago business barometer rose to 50.8 from 49.6 in June, a significant reading because anything over 50 indicates expansion mode.
A previous manufacturing report out of Milwaukee also showed a rebound in new orders, "so we now have to expect a small uptick in the national ISM report tomorrow," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients.
Tomorrow is a big day for economic news: In addition to the national manufacturing reading, we've got the July jobs report before the bell and July auto sales throughout the day.
Meanwhile, Marathon Oil shares rose 9.6 percent after the oil refiner said it may split into two entities: oil and gas production, and refining and marketing.
Visa earnings topped forecasts, helped by an increase in fee revenuefrom international transactions. Mastercard also beat expectations but spending volume growth was weakin the U.S. Shares fell 6.9 percent and 1.5 percent, respectively.
Starbucks posted a loss but its shares finished flat amid relief after the coffee chain offered details on its previously announced store closings.
Still to Come:
FRIDAY: Auto sales; Jobs report; construction spending; ISM manufacturing report; Yahoo annual shareholder meeting; Earnings from GM, Chevron
Correction: An earlier version of this story said engineering firm Fluor was the biggest decliner on the S&P 500 in July, falling 56 percent. That was incorrect due to a data error that did not account for the stock's recent split. Fluor stock actually dropped 12 percent in July, and was not among the top decliners on the S&P.
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