Stocks fall on higher oil

Stocks fall on higher oil

	Published : Mon, 22 Jan 2007 17:32 By : Agencies Print this Story

NEW YORK (AFX) - Stocks skidded lower Monday as a sharp jump in oil prices, a downgrade of Boeing Co., and ongoing concerns about technology stocks led jittery investors to pull money out of the market.

The market has been moving erratically of late, with investors cautious about the direction of the economy and treading carefully ahead of this week's big wave of earnings reports. The tech sector so far has been knocked down the most, after Apple Inc.'s and Intel Corp.'s results last week fell below the Street's expectations.

The stock market balked at rising crude oil prices and a report from the Chicago region's Federal Reserve indicating above-trend growth in December for the first time in four months. Oil is still down about 15 percent on the year, but if fuel costs rebound, consumer spending could be crimped -- and could be hurt even more if U.S. Fed policy makers believe the economy is growing steadily enough to withstand an interest rate hike.

The market is in a tug of war right now over whether interest rates will be raised or lowered later in the year, said Jim Herrick, manager and director of equity trading at Baird & Co. 'Also, some believe oil will continue to go lower, some believe oil will go back to the levels of last year ... There's two camps right now, and that's why we are having this volatility.'

Blue chip stocks also slipped after a Wachovia analyst downgraded Boeing, citing possible aircraft order delays.

In midmorning trading, the Dow Jones industrial average fell 93.73, or 0.75 percent, to 12,471.04.

Broader stock indicators were also lower. The Standard & Poor's 500 index was down 7.25, or 0.51 percent, to 1,423.25, and the Nasdaq composite index was down 27.08, or 1.10 percent, to 2,424.23.

Bonds rose although investors' hopes for an interest rate cut have dwindled in response to upbeat economic data. The yield on the benchmark 10-year Treasury note edged lower to 4.77 percent from 4.78 percent late Friday.

The dollar rose against other major currencies, while gold prices also rose.

Crude oil prices climbed $1.17 to $53.16 a barrel on the New York Mercantile Exchange Monday, extending a large jump Friday due to colder weather in Northeast United States, the biggest heating oil consuming region.

Boeing fell $2.72, or 3.1 percent, to $85.92 after the Wachovia downgrade.

Better than expected earnings from Pfizer Inc. failed to stoke the market. The company, which has seen patent expirations on key drugs eat into profits, reported Monday that its fourth-quarter earnings fell, but only after taking into account the $16.6 billion sale of its consumer health care business to health care products maker Johnson & Johnson last month. Investor enthusiasm was restrained ahead of the world's biggest drug maker restructuring plan, scheduled to be released later in the day.

Pfizer slipped 14 cents to $27.08.

Tech stocks continued to drop Monday, though a strong report later in the day from Texas Instruments Inc., which makes chips for cell phones, could help revitalize the sector. Texas Instruments rose 4 cents to $28.43.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 404.2 million shares.

The Russell 2000 index of smaller companies was down 8.15, or 1.04 percent, at 777.14.

Overseas, Japan's Nikkei stock average rose 0.66 percent. In afternoon trading, Britain's FTSE 100 was up 0.18 percent, Germany's DAX index was down 0.47 percent, and France's CAC-40 was down 0.18 percent.