NEW YORK - US stocks touched new lows for the year on Tuesday, as higher oil prices reignited fears about corporate profits, while heavy equipment makers such as Caterpillar Inc. tumbled.
The Nasdaq notched a fresh low for 2005, closing at its lowest since October 2004. The Standard & Poor's
500 hit a fresh low for the year before recouping some losses, while the Dow ended at its lowest in about 2 months.
Caterpillar tumbled 4.7 per cent, down US$4.42 to US$89.80, after Morgan Stanley issued a report saying such stocks may be near their peak. Manufacturer Ingersoll-Rand Co Ltd. fell nearly 2 per cent, or US$1.79 to US$78.98.
Another negative for stocks was crude oil reversing course and bouncing into positive territory. Crude for May delivery settled up 18 cents at US$54.23 a barrel, reversing an earlier fall. High oil prices hurt corporate profits and consumer spending and generally weigh on equities.
The Dow Jones industrial average dropped 79.95 points, or 0.76 per cent, to 10,405.70. The Standard & Poor's 500 Indexdropped 8.92 points, or 0.76 per cent, to 1,165.36. The Nasdaq Composite Index dropped 18.64 points, or 0.94 per cent, to 1,973.88.
Also dragging on stock markets was a report that US consumer confidence fell slightly in March, as higher petrol prices dampened the mood of car-reliant Americans.
In addition, investors were cautious ahead of Friday's keenly anticipated jobs report for March.
"There are continuing concerns about the possibility of higher inflation down the road, while investors are clearly focused on the data on Friday on payroll," said Ned Riley, chief investment officer of Riley Asset Management.
He added that there was "still some disappointment that we haven't seen a greater price erosion" in oil.
"Today's weakness prevails in the steels, metals and capital goods manufacturers, which have been the darlings of the market for an extended period of time," said Riley.
"The scenario, if carried out to its most negative extent, would be that inflation continues to be the target of the Federal Reserve, and the Fed starts to accelerate the increase in interest rates. Then, the choking off of this fairly buoyant recovery would have its most severe impact on cyclicals stocks. "
Mining equipment maker Joy Global Inc. dropped US$3.31, or 9.2 per cent, to US$32.69 and construction equipment maker JLG Industries Inc. fell US$1.55, or 6.8 per cent, to US$21.18.
Business systems company NCR Corp. slid 17.2 per cent, or US$6.50, to US$31.40 after Hewlett-Packard Co. named NCR Chief Executive Mark Hurd to lead the No. 2 computer maker and replace CEO Carly Fiorina, who was ousted in February.
Hewlett-Packard rose 10.1 per cent to US$21.78.
Meanwhile, shares of Morgan Stanley fell 3.4 per cent, or US$1.87, to US$53.61. Eight of its former partners who earlier this month quietly asked the board to replace Chairman and Chief Executive Philip Purcell went public, saying management changes announced by the firm failed to address the problems they raised.
Drug stocks were also weak. Pfizer, fell 2.3 per cent, or 59 cents, to US$25.64. Austrian authorities have invalidated a patent covering Pfizer's cholesterol-lowering drug, Lipitor, according to a notice on the Bombay Stock Exchange. The decision applied only in Austria.
Trading was heavy, with 1.76 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.83 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Decliners outnumbered advancers on the New York Stock Exchange by about 2 to 1 and by about 3 to 2 on Nasdaq.
- REUTERS
NEW YORK - US stocks touched new lows for the year on Tuesday, as higher oil prices reignited fears about corporate profits, while heavy equipment makers such as Caterpillar Inc. tumbled.
The Nasdaq notched a fresh low for 2005, closing at its lowest since October 2004. The Standard & Poor's
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