Associated Press
July 08, 2008 01:26 pm
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NEW YORK — Wall Street managed an uneasy advance Tuesday amid sinking oil prices, with investors still jittery about the ailing financial system and weak economy ahead of second-quarter earnings.
Investors were relieved to hear Federal Reserve chairman Ben Bernanke say in a speech that the central bank might extend its lending efforts to investment banks. And in another positive development for stocks, oil tumbled for a second day — crude fell $5.03 to $136.34 a barrel on the New York Mercantile Exchange, after falling nearly $4 a barrel a day earlier.
“We do have some good news, and that’s oil,” said Kim Caughey, equity research analyst, Fort Pitt Capital Group. Still, she said, “there are a lot of things to worry about. We need to see gasoline prices coming down to take the pressure off consumers. ... The microeconomies of North America are being affected by the price of gas, and that’s a concern.”
The average U.S. retail price of a gallon of gasoline remains at a record $4.108, according to AAA auto club, the Oil Price Information Service and Wright Express.
The drop in crude oil also arrives amid escalating worries about deteriorating lending conditions and the still-slumping housing market. Late Monday, cash-strapped IndyMac Bancorp Inc. said it is no longer accepting new mortgage loan submissions and is cutting 3,800 jobs — more than half its work force. IndyMac shares fell 31 cents, or 44 percent, to 40 cents a share.
Meanwhile, the National Association of Realtors said Tuesday that pending sales of U.S. homes fell by 4.7 percent in May from the previous month. The worsening housing market not only stifles consumer spending, but also hurts the chances of a recovery at the banks that make loans and are invested in risky mortgage debt.
At the Federal Deposit Insurance Corp.’s forum on mortgage lending, where Bernanke spoke, JPMorgan Chase & Co. CEO Jamie Dimon said “the future is very, very bright,” but that “I do think we have some very serious issues to face.”
In early afternoon trading, the Dow Jones industrial average rose 42.74, or 0.38 percent, to 11,274.70, after moving in and out of positive territory. The Dow is trading near two-year lows.
Broader stock indicators rose as well in choppy trading. The Standard & Poor’s 500 index rose 3.71, or 0.30 percent, to 1,256.02, while the Nasdaq composite index rose 16.63, or 0.74 percent, to 2,259.95.
Bond prices edged higher Tuesday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.89 percent from 3.91 percent late Monday.
The dollar rose against other major currencies, while gold prices fell.
The Dow finished an erratic session Monday with a moderate loss, keeping the blue-chip index entrenched in bear market territory. A bear market is traditionally defined as a drop of 20 percent from its last peak.
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