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Energy, economy, earnings hamper stocks
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(AP Photo/Shizuo Kambayashi)
Stocks fared poorly in front of the unofficial kick-off to 2Q earnings season set for tomorrow afternoon as falling energy prices and lingering worries over June's employment report raised raised fresh fears that the economy may need a second stimulus package.
The Dow Jones Industrials ended the day near the low of the session, losing 161 points to finish at a two-month low of 8,164, and the S&P 500 Index declined 18 points to close at 881.
Crude oil extended recent losses and fell another $1.12 per barrel on the New York Mercantile Exchange to finish at $62.93 amid rising concerns about the global economy's performance later in the year. And oil came under new selling pressure in after-hours trading.
Weakness in oil prices leaned heavily on energy producers, which were among the big losers today. Exxon Mobil (XOM) and ConocoPhillips (COP) lost over 2%, while Valero Energy (VLO), the nation's largest independent refinery, ended down nearly 5%.
Weakness also extended to oil-service firms, with Schlumberger (SLB) shedding over 4%.
The revival of economic concerns also aided Treasuries, with the yield on the benchmark ten-year bond shrugging off an average auction for the three-year note, falling to 3.45%. Declining yields, however, should put downward pressure on mortgage rates and may underpin housing.
Continued economic weakness has definitely bruised market sentiment, and the June labor report only served to fuel fears that any economic recovery won't get underway until 2010. See Thoughts on the unemployment report.
But much of the economic data has been telegraphing a different story, including Monday's better-than-expected gauge of the nation's service sector, the ISM Non-Manufacturing Index. See Key service report has recession easing.
Trying to call short-term market tops and bottoms is very risky business in my opinion, but sentiment can and does change on a dime. Consequently, guidance and commentary from the country's largest firms will likely be critical for the market as the earnings deluge hits over the next couple of weeks.
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