US stocks dip

US stocks closed with a narrow loss today as declining oil prices sent the energy sector lower and investors continued their jittery reactions to corporate earnings.

Energy stocks such as Halliburton and Valero Energy fell along with crude oil futures, pulling the Standard & Poor’s 500 index lower on a day when most other sectors were nearly flat.

Trading remains choppy after last Friday’s big drop, which sent the Dow down 213 points. The selloff followed a strong start to 2006, which sent the major indexes to multi-year highs.

“We had that great run up,” said Susan Malley, chief investment officer for Malley Associates Capital Management.

“Stocks were fully pricing good earnings reports or good outlook. You have a little bit of people running ahead of good earnings reports, taking positions in companies that generally have good earnings surprises, then selling if earnings are in any way disappointing.”

The Dow Jones industrial average fell 2.48, or 0.02%, to 10,709.74.

Broader stock indicators also declined. The Standard & Poor’s 500 index fell 2.18, or 0.17%, to 1,264.68 and the Nasdaq composite index fell 4.60, or 0.2%, to close at 2,260.65.

Crude oil futures fell, dropping 10 cents a barrel to US$66.75 (€54.53) in trading on the New York Mercantile Exchange.

Bonds fell, with the yield on the 10-year Treasury note rising to 4.47% from 4.39% late on Tuesday. The dollar rose against other major currencies; gold prices also climbed.

In economic news, the National Association of Realtors said existing home sales dropped 5.7% in December to 6.6 million units. Economists had expected sales to come in at an annualised rate of US$6.87m (€5.61m), down from US$6.97m (€5.7m) in November.

The decline in home sales, with the return of the inverted yield curve, in which some short-term bonds sell for higher yields than long-term bonds, are signs of a pending economic slowdown, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

“This data confirms the scenario in which we see slowing growth due to weaker housing,” he said. “We don’t believe that the slack will be fully taken up by corporate spending.”

Nervousness about unrest in Nigeria and Iran’s nuclear ambitions helped send the energy sector lower. Halliburton fell 1.71 to 74.24 in advance of its earnings, expected tomorrow, and Valero fell 1.93 to 58.37.

Walt Disney fell 55 cents to 25.44 after agreeing to acquire Pixar Animation Studios for US$7.4bn (€6.05bn) in stock. The deal will make Steve Jobs, Pixar’s chief executive, the single largest shareholder of Disney stock, and give him a seat on Disney’s board. Pixar rose 45 cents to 58.02.

Boston Scientific fell 46 cents to 23.54 after winning the battle for medical device maker Guidant with a US$27.2bn (€22.22bn) cash-and-stock deal that trumped a lower bid by Johnson & Johnson. Guidant fell 1.59 to 75.19, while Johnson & Johnson fell 86 cents to 58.50.

In earnings news, Xerox reported an 18% jump in fourth-quarter profits, but revenues dropped 2% and the stock slipped 15 cents to 14.31.

Drugmaker Bristol Myers Squibb rose 64 cents to 21.97 after its quarterly profit beat Wall Street expectations by 3 cents per share despite slipping sales due to generic competition on a growing number of products.

Declining issues outnumbered advancers by roughly 9 to 7 on the New York Stock Exchange, where volume totalled 1.92bn shares, up from 1.88bn traded at the same point on Tuesday.

The Russell 2000 index of smaller companies fell 4.51, or 0.63%, to 713.51.