Market falls as oil, UPS spark earnings fears
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Wed, 09 Apr 2008 18:49:06 GMT |
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By Kevin PlumbergNEW YORK (Reuters) - Stocks fell on Wednesday after United Parcel Service Inc slashed its quarterly earnings forecast because of the deteriorating economy and oil prices hit a record high above $112 a barrel, darkening the outlook for corporate results.The S&P 500 index fell as much as 1 percent.Shares of UPS, considered a bellwether of U.S. economic activity, tumbled 3.4 percent to $70.79, on track for the largest daily decline since early November 2007. Meanwhile, Caterpillar Inc and United Technologies Corp , whose shares are sensitive to fluctuations in energy prices, were the biggest weights on the Dow.The lowered profit forecast from UPS fed fears that fallout from the U.S. housing slump and credit crisis have hurt other parts of the economy. General Electric Co , which will report its results on Friday, also declined and was the heaviest drag on the S&P 500."Engineering and construction companies are under pressure. The reason is the perception that they are not going to be spared," said Stanley Nabi, vice chairman of Silvercrest Asset Management Group in New York."All of these deep industrials are under pressure on the fear that this downturn we are in is going to broaden beyond housing," he said.The Dow Jones industrial average <.DJI> declined 77.92 points, or 0.62 percent, to 12,498.20. The Standard & Poor's 500 Index <.SPX> was down 11.64 points, or 0.85 percent, at 1,353.90, after hitting a session low at 1,351.59. The Nasdaq Composite Index <.IXIC> was down 31.02 points, or 1.32 percent, at 2,317.74.GE shed 1.8 percent to $36.27 on the New York Stock Exchange.U.S. crude oil futures rose to a record above $112 a barrel on a supply squeeze after government data showed a surprising draw on crude stockpiles last week. That caused a ripple effect on the stock market as investors factored in higher energy costs and lower consumer spending.The S&P retailers index declined 2.5 percent, down for the fifth consecutive day, its longest losing streak since late December 2007.The Dow Jones Transportation Average <.DJT> was down 3.4 percent as well, falling for four straight days.Shares of Morgan Stanley helped to drag down financials. The investment bank said that more of its assets became illiquid or hard to value during the first quarter. Shares of Morgan Stanley dropped almost 3 percent to $45.98 while an S&P index of financial stocks <.GSPF> slipped 1.3 percent."That's part of the weakness. Morgan Stanley is putting a little more concern back into financials," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.On Nasdaq, shares of Research In Motion Ltd , the maker of the BlackBerry, declined 2.6 percent to $118.38. The stock was started with a "hold" rating at Needham, a brokerage.Apple Inc , down 1.1 percent at $151.19, also weighed on the Nasdaq. Apple this week received its sole "underperform" rating, from Morgan Keegan.On Tuesday, minutes from the Federal Reserve's policy-setting meeting showed Fed economists expected the economy to contract in the first six months of 2008, a scenario that could curb the appetite for stocks as profit growth falters.(Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)
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