Stocks slumped today as oil prices inched back up from earlier lows and an investigation of the insurance industry pressured managed care stocks, trumping better-than-expected earnings from IBM and Texas Instruments.
Shares of managed care providers tumbled on newspaper reports that an ongoing probe by the office of New York Attorney General Eliot Spitzer extended to health insurers.
Volatile oil prices also prompted investors to sell – although crude oil prices retreated for a second session, the market was unnerved by its slow creep back above 53 dollars per barrel.
“Between Spitzer and oil prices, it’s taking away from some of the party that we saw earlier with IBM and Texas Instruments, which has helped the Nasdaq hold it together today,” said Steven Goldman, chief market strategist for Weeden & Co in Greenwich, Connecticut.
The Dow Jones industrial average was down 58.70, or 0.59%, at 9,897.62.
The broader gauges were mixed. The Standard & Poor’s 500 index sagged 10.79, or 0.97%, to 1,103.23. The Nasdaq composite index fell 13.62, or 0.70%, to 1,922.90, despite strength among chip stocks on earnings news.
Capping a lid on stocks, persistent supply worries and an attack on a key Iraqi pipeline helped oil rebound after steep declines on Monday, and although prices stayed in negative range, they did make up some of their losses.
Light, sweet crude for November delivery was down 38 cents at 53.29 dollars on the New York Mercantile Exchange. Other commodities were also under pressure, including steel and paper.
In economic news, the Labour Department reported a modest 0.2% rise in September for its Consumer Price Index as lower prices for new cars and airfares helped temper a rise in energy and medical care costs.
The reading of the government’s most closely watched inflation barometer matched economists’ expectations, but the report raised some worries.
Core prices – which exclude volatile energy and food prices – rose 0.3% on higher lodging costs, a greater increase than the 0.2% projected by economists.
It was unclear whether the inflation reading would have any impact on the Federal Reserve’s policy on interest rates.
The Fed has boosted short-term rates three times this year, and many analysts believe its November 10 meeting will bring a fourth hike. But observers are divided on whether a fifth rate increase is in store for December.
Separately, housing construction fell by 6% in September to a seasonally adjusted annual rate of 1.898 million units, the Commerce Department said.
The decline, steeper than expected, followed a 1.8% rise in housing activity in August, which turned out to be stronger than initially estimated.
The news put pressure on housing stocks.
Decliners outnumbered advancing issues by about 2 to 1 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, which tracks smaller company stocks, was down 5.36, or 0.94%, at 566.67.