Stocks fall in light trading; oil rises on Mideast tensions
NEW YORK -- Stocks retreated Monday as continuing violence in the Middle East and a resulting jump in oil prices reminded investors that the market could face problems beyond the recession.
The collapse of a Dow Chemical joint venture, meanwhile, intensified Wall Street's economic worries.
Investors remained cautious in a holiday-shortened week, unwilling to make many big bets in the final three days of trading for 2008. Israel's escalating attacks against Gaza's Hamas rulers made traders more hesitant to buy.
The tensions pushed oil prices above $40 a barrel during the session, with crude closing up $2.31 at $40.02 a barrel on the New York Mercantile Exchange. Oil had fallen more than $100 from its peak of $147.27 a barrel on July 11 as a slowing economy curbed demand, but the fighting in Gaza raised the possibility of supply disruptions that could send prices climbing again.
Todd Leone, managing director of equity trading at Cowen & Co., said trading volume is extremely light and that is contributing to the market's swings. Low volume tends to skew price movements.
"What's going on in Israel didn't read well over the weekend," Leone said. "Beyond that, it is an incredibly quiet session. It's really not taking much to move the markets."
Investors also digested a potential blow to dealmaking on Wall Street. On Sunday, Kuwait's government canceled its $17.4 billion K-Dow Petrochemicals joint venture with Dow Chemical, saying it was "very risky" because of the global financial crisis and low oil prices. The joint venture was set to begin Thursday.
Rohm & Haas maintains that its proposed $15.3 billion takeover by Dow Chemical won't be affected by Dow's substantial loss of income from the venture. But investors punished shares, driving them down $9.60, or 15.1%, to $53.96. Dow Chemical shares lost $3.15, or 16.3%, to $15.35.
The Dow Jones industrial average fell 31.62, or 0.37%, to 8,483.93.
Broader indexes also declined. The Standard & Poor's 500 index fell 3.38, or 0.39%, to 869.42; the Nasdaq composite index fell 19.92, or 1.30%, to 1,510.32.
