US stocks sank on Tuesday as oil prices neared $120 a barrel and fed worries about inflation and consumer spending, while a series of disappointing profit outlooks made the mood even worse.
Airline stocks were particularly hard hit, plunging 12.4 percent to a record low, as soaring oil has pushed jet fuel costs to record levels and retailers' shares dropped 2.2 percent on fears that Americans will curtail shopping to pay for higher gasoline prices.
Texas Instruments Inc added to worries about the economic outlook by warning of tepid demand for cell phones. Its stock fell 5.8 percent to $28.82. Inconsistent earnings during the quarterly reporting period have kept concerns about the economy close to the surface. While big multinationals with significant overseas sales have fared well, companies with a more domestic focus have sputtered.
Oil "has done nothing but go straight up, and obviously, it has put a damper on any type of economic recovery, but after a certain point in time, the consumer is just going to have to stop spending," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets, in Baltimore.
The Dow Jones industrial average fell 104.79 points, or 0.82 percent, to 12,720.23. The Standard & Poor's 500 Index slid 12.23 points, or 0.88 percent, to 1,375.94. The Nasdaq Composite Index dropped 31.10 points, or 1.29 percent, to 2,376.94.
Oil jumped to a record $119.90 a barrel intraday, fuelled by weakness in the dollar, which encouraged buying of commodities, and developments in Nigeria and the UK that increased concerns about oil supply.
After the close, Yahoo Inc reported a profit, excluding items, at the top end of Wall Street's estimates. But its stock slipped 0.5 percent in after-hours trading to $28.39. During regular trading, Yahoo dipped 1 cent to close at $28.54 on the Nasdaq.
Shares of Yum Brands Inc, however, shot up more than 3 percent to $39.95 after the bell as the operator of KFC, Taco Bell and Pizza Hut fast-food chains, posted a quarterly profit that topped Wall Street's estimates. Yum had closed on the NYSE at $38.49, down 1.5 percent before the results were released.
During the regular session, shares of UAL Corp, parent of United Airlines, plummeted 36.8 percent, or $7.88, to $13.55 on the Nasdaq after the company reported a quarterly loss that was more than triple a year ago on soaring fuel costs.
AirTran Holdings, parent of AirTran Airways, also reported a loss as did JetBlue Airways. Shares of AirTran tumbled 20.8 percent, or 95 cents, to $3.61 on the New York Stock Exchange, while JetBlue's shares lost 5.7 percent, or 28 cents, to $4.65 on the Nasdaq.
Shares of Apple Inc fell 4.7 percent to $160.20 on the Nasdaq. Apple ranked as the top drag on both the S&P 500 and the Nasdaq 100 after American Technology Research downgraded the iPod maker's stock to "neutral" from "buy," saying it is no longer inexpensive and the company's near-term results might not meet expectations.
Other companies disappointing investors included UnitedHealth Group Inc. It posted a lower-than-expected first-quarter profit, hurt by weakness in its business serving employers and slashed its full-year earnings forecast. Its shares fell 9.7 percent to $34.15.
Trading was moderate on the NYSE, with about 1.33 billion shares changing hands, well below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 1.95 billion shares traded, below last year's daily average of 2.17 billion. Declining stocks outnumbered advancing ones on the NYSE by more than 2 to 1 and on the Nasdaq by 3 to 1.
Comments
Comments are closed.