Internet Stocks Limit Crude's Relief
Stocks found room to breathe Wednesday as the choking grasp of ever higher oil prices relaxed and crude dropped almost 3%.
After trading as low as 10,068.11 intraday, the Dow Jones Industrial Average rebounded to trade as high as 10,162.42, before finishing with a gain of less than 0.1% to 10,126.51.
Following a similar pattern, save for the higher close, the S&P 500 ended down 0.1% at 1098.63 vs. its intraday low of 1092.47 and high of 1102.44. Meanwhile, crummy results at leading Internet vendors limited the Nasdaq Composite; it dropped 0.2% to 1,855.06 after trading as low as 1842.20 and as high as 1864.80.
Stock proxies erased their losses in the afternoon once the New York Mercantile Exchange's September crude contract closed down $1.32 to finish at $42.83. The oil swoon boosted airlines, mainstream technology companies and others that faced higher costs and lighter demand from consumers due to crude's rise. Economic data showing manufacturing orders expanding in June also helped.Still, weak earnings and lack of follow-through in the Nasdaq and S&P 500 don't generate much confidence that Wednesday's action will ignite a huge rally -- especially with Friday's employment report and next week's FOMC meeting looming ahead. The Dow was led higher by Procter & Gamble (PG), up 40 cents to $54.06, Hewlett-Packard (HPQ), up 19 cents to $20.44, and Citigroup (C), up 36 cents to $44.40. Notable drags on the price-weighted index included Exxon Mobil (XOM) and American International Group (AIG). But the decline in oil prices wasn't enough to save Internet stocks from getting gored again. Jim Cramer is blaming Google's pending IPO, but it seems as if the actual results of this crowd are to blame. Poor earnings and reduced outlooks simply aren't meeting the often lofty expectations for these high fliers. Barry Diller's IAC/InterActiveCorp (IACI) was among those hardest hit on Wednesday, finishing down 16% to $22.80. IAC, which owns Hotels.com, the Home Shopping Network and Ticketmaster, said net income in the second quarter fell 25% while revenue of $1.5 billion was less than expected. The company also said full-year cash flow would be at the bottom end of previous guidance.
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