Stocks falter as earnings jitters increase
NEW YORK -- Falling oil prices and unease over corporate earnings are putting more pressure on stocks.
Stocks were mostly lower in early trading Friday, as investors shed positions in energy, utilities and bank shares.
News that Chevron's refining margins fell in the second quarter is adding to the market's worries. On a year-over-year basis, Chevron's overall second-quarter results are forecast to be much lower than those for 2008. Oil prices subsequently resumed their descent early Friday after a slight pop on Thursday, falling below $60 a barrel.
The market is also on edge ahead of more earnings reports, which pick up pace next week. Investors have sent major indexes down about 7% since mid-June on the belief that a more than 40% run-up in stocks this spring was unwarranted, considering the problems that still plague the economy.
There was some good news Friday. The Commerce Department said the U.S. trade deficit narrowed to $26 billion in May — the lowest level in more than nine years. The report seemed to temper some of the market's losses.
The declines Friday come after a small advance the day before, when all the major indexes posted single-digit gains. Finding some encouragement in better-than-expected results from aluminum maker Alcoa (AA), investors put money into commodities producers, banks and industrial companies.
Despite the slight increase in risk taking Thursday, the overall mood in the market is one of caution. Investors are anxious for more clarity on where the economy is headed. They are looking to companies' earnings reports for just that, but expectations are low.
Falling crude prices continued to weigh on the market Friday. A barrel of crude traded at $59.29, down $1.12, on the New York Mercantile Exchange. Oil prices have fallen sharply since hitting an eight-month high of $73 early last week. The drop in prices has sent stocks falling as investors anticipate that a weaker world economy will mean less demand for energy.
In corporate news, General Motors CEO Fritz Henderson announced that the automaker has emerged from bankruptcy protection after just a little over a month of being under court supervision. He said the company now will focus more on customers, including a partnership with eBay for people to buy vehicles by auction online.
Overseas, Japan's Nikkei stock average fell 0.04. In afternoon trading, Britain's FTSE 100 was down 0.3%, Germany's DAX index fell 0.2% and France's CAC-40 lost 0.8%.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.34% from 3.41% late Thursday.
In other trading, the Russell 2000 index of smaller companies fell 1.24, or 0.3%, to 478.03.
About two stocks fell for every one that rose on the New York Stock Exchange, where volume came to a low 135.8 million shares.
The dollar rose against other major currencies, while gold prices were down.