Stocks drop mod­estly as crude price falls

In­vestors watch cor­po­rate earn­ings for eco­nomic views

Baltimore Sun - - BUSINESS MARYLAND - By Alex Veiga

Ma­jor U.S. stock in­dexes closed mod­estly lower Mon­day, with some of the big­gest de­clines com­ing in oil and gas com­pa­nies as en­ergy prices turned lower.

Com­pa­nies that rely on consumer spend­ing also lost ground. Util­i­ties and tele­com stocks, which pay large div­i­dends, bucked the down­ward trend as bond yields fell.

In­vestors had their eye on cor­po­rate earn­ings. Some 80 of the com­pa­nies in the Stan­dard & Poor’s 500 in­dex are sched­uled to re­port their quar­terly re­sults this week. How those com­pa­nies fared in the third quar­ter, and how they see their prospects for growth in com­ing months, should give traders a bet­ter han­dle on the state of the econ­omy.

“You have a mar­ket that is try­ing to de­ci­pher where the econ­omy is headed, what com­pa­nies are telling us and what the Fed is poised to do come De­cem­ber,” said Quincy Krosby, mar­ket strate­gist at Pru­den­tial Fi­nan­cial.

The Dow Jones in­dus­trial av­er­age lost 51.98 points, or 0.3 per­cent, to 18,086.40. The av­er­age was down as much as 75 points ear­lier in the day. Its two big­gest de­clin­ers: McDon­ald’s and Nike, each down 1 per­cent.

The S&P 500 in­dex slid 6.48 points, or 0.3 per­cent, to 2,126.50. The Nas­daq com­pos­ite in­dex fell 14.34 points, or 0.3 per­cent, to 5,199.82.

The three in­dexes have posted weekly de­clines the past two weeks. The Dow and Nas­daq are up about 3.8 per­cent for the year, while the S&P 500 is up 4 per­cent.

As has be­come the pat­tern in re­cent quar­ters, fi­nan­cial an­a­lysts have fore­cast earn­ings for the third quar­ter to be down over­all from a year ago, largely due to the down­beat en­ergy sec­tor. While the en­ergy sec­tor leads all oth­ers in the S&P 500, up 14.2 per­cent for the year, it was among the big­gest lag­gards again on Mon­day.

South­west­ern En­ergy was the big­gest de­cliner in the S&P 500, slid­ing 43 cents, or 3.3 per­cent, to $12.47. Ch­e­sa­peake En­ergy fell 21 cents, or 3.2 per­cent, to $6.35. Devon En­ergy shed $1.31, or 3 per­cent, to $41.77.

Be­yond earn­ings, in­vestors also bid up shares in Su­perValu af­ter the gro­cery store and lo­gis­tics com­pany agreed to sell its Save-A-Lot unit to Cana­dian pri­vate eq­uity firm Onex Corp. for $1.37 bil­lion. The stock added 29 cents, or 5.8 per­cent, to $5.30.

Euro­pean mar­kets fell as a broad rise in govern­ment bond yields sug­gested in­vestors are ex­pect­ing less cen­tral bank stim­u­lus and higher in­ter­est rates than be­fore.

U.S. bench­mark crude oil fell 41 cents, or 0.8 per­cent, to close at $49.94 a bar­rel in New York. Brent crude, the in­ter­na­tional stan­dard, lost 43 cents, or 0.8 per­cent, to close at $51.52 a bar­rel in Lon­don.

The price of gold rose $1.10 to $1,256.60 an ounce, while sil­ver added 3 cents to $17.47 an ounce.

Bond prices rose. The yield on the 10-year Trea­sury note fell to 1.77 per­cent from 1.80 per­cent late Fri­day.

The dol­lar weak­ened to 103.85 yen from 104.18 on Fri­day, while the euro strength­ened to $1.0997 from $1.0983.

RICHARD DREW/AP

Traders work at the New York Stock Ex­change on Mon­day when en­ergy stocks lost ground.

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